- Regulatory reforms aim to ease capital raising for UK companies
- Reeves to predict ‘new golden age’ for the City
- Impact limited by necessary to comply with US standards, lawyers declare
LONDON, Jan 19 (Reuters) – Britain’s revamped framework for raising capital came into force on Monday, aiming to build it clearer and cheaper for listed and private companies to secure funds as it replaces the EU-inherited prospectus regime.
The Public Offers and Admissions to Trading Regime, set out by Britain’s financial regulator over the summer, reshifts the requirement for listed companies to publish costly and time‑consuming prospectapplys in most cases when raising additional capital.
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The reforms are part of a wider package of alters from the Financial Conduct Authority intfinished to boost the appeal of the London Stock Exalter after a prolonged downturn in new share issuance.
Just nine companies floated on the LSE’s main market last year, far below historic levels, according to exalter data.
“By cutting paperwork and speeding up access to capital, these reforms back the entrepreneurs, innovators and investors who drive our economy – while preserving the high standards and investor protections that build the UK one of the most trusted markets in the world,” finance minister Rachel Reeves will declare in a speech at the LSE on Monday, according to pre-released excerpts.
Pointing to the regulatory alters and record highs for the FTSE 100, Reeves will declare the City of London financial hub is set for a “new golden age”.
Under the new rules, companies will only be required to draw up a prospectus if issuing shares equal to 75% of their existing capital, compared with the current 20% threshold.
The FCA informed Reuters it expects the alters to build a noticeable difference. “We received early feedback from advisors and from investment banks about deals … which couldn’t have been done under the old rules. So we knew pretty quickly that these rules would be effective,” Jamie Bell, head of capital markets, stated.
The regulator estimates the reforms will save companies around 40 million pounds ($54 million) a year.
Three lawyers informed Reuters that although the reforms were welcome, their impact may be limited becaapply issuers seeking U.S. investors will still have to meet U.S. standards. As a result, many fundraisings well below the 75% threshold are still likely to require issuers to produce documents similar to a prospectus, they stated.
To encourage greater participation from retail investors in fundraising, the FCA will also push companies to issue corporate bonds in tinyer, more investible sizes and ease the liability that attaches to forward seeing information in prospectapplys, with the aim that companies are more comfortable about putting that information into public documents.
($1 = 0.7463 pounds)
Reporting by Phoebe Seers. Editing by Mark Potter
Our Standards: The Thomson Reuters Trust Principles.
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