The Department for Business, Innovation and Skills (BIS) on 20 September 2012 announced that it has developed a set of proposals with the London Stock Exchange (LSE) aimed at attracting high-growth companies to list their businesses on the LSE. The proposals include a new route to market which would be likely to feature more relaxed rules on the free float, eligibility criteria and reporting requirements. Currently, at least 25% of the shares of a company applying for a premium listing must be held by the public in one or more EEA states at the time of admission. This may be reduced to as little as 10% under the new rules.
The proposals are designed to improve the environment for initial public offerings (IPOs) in the UK for technology businesses and other fast growing businesses which may be unwilling to comply with the more stringent rules of a full premium listing. BIS hopes that the rules will allow the London Stock Exchange to compete with the Nasdaq index as a home for European start-ups. It follows a realisation that European mid-sized high-growth businesses are currently under-represented on the UK’s public markets and are often choosing the US rather than the UK for their IPOs. It is also a response to President Obama’s Jobs Act in the US which eased rules for small company IPOs.
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