United Kingdom to Reform IPO System to Boost London’s Appeal

The UK’s Financial Conduct Authority (FCA) will implement a significant overhaul of the stock market listing system, aiming to attract initial public offerings (IPOs) and encourage companies to choose London for their market debut.

The new regulations, which represent the most substantial changes in three decades according to the FCA, will introduce a simplified regime for listing admission. This includes a single category and less stringent requirements for companies wishing to list in the UK.

Under the new rules, the need for shareholder votes on “significant” transactions will be eliminated, and greater “flexibility” regarding enhanced voting rights will be provided. This change will facilitate the structure of dual-class shares, favored by entrepreneurs and business angels who wish to maintain a significant role in their companies even after going public.

However, shareholder approval will still be required for “key events” such as reverse takeovers or delisting from a stock index.

The FCA has acknowledged that the new regulation, which will come into effect on July 29, involves accepting “greater risks,” but believes these changes will better reflect “the risk appetite the economy needs to drive growth.”

The FCA noted that the number of listed companies in the UK has fallen by nearly 40% since 2008. Furthermore, between 2015 and 2020, the UK accounted for only 5% of global IPOs.