On 1 July, HM Treasury published a consultation that takes forward three key recommendations from Lord Hill’s UK Listings Review (click here for further information on that Review). It sets out how the Government proposes to: (i) review and potentially replace the prospectus regime that the UK has inherited from the EU; (ii) give the Financial Conduct Authority (FCA) new rule making responsibilities that will allow it to incorporate a replacement prospectus regime into its handbook; and (iii) amend the prospectus liability regime so that there are fewer barriers to the inclusion of more forward-looking information in prospectuses.
The Government is seeking views on its proposals from, among others, investors and financial services firms. The consultation will close on 24 September 2021.
With these proposals, the Government is seeking to:
- facilitate wider participation in public offerings, including by retail investors, by removing certain disincentives that currently exist from companies structuring their offerings to allow for this;
- without lowering regulatory standards, simplify the regulation of prospectuses and remove unnecessary duplications (most notably by separating out the regulation of admissions to stock markets from the regulation of public offers of securities);
- improve the quality of information that investors receive under the prospectus regime; and
- make the most of the opportunities presented by the UK leaving the EU by ensuring that the regulation of prospectuses is more agile and dynamic.
These are sensible aims and the proposed methods for achieving them are both attractive and indicative of a positive step change to the UK listing regime. In practice, though, there is a lot still to be worked through, as many of the more detailed changes will be left for the FCA to implement using its proposed new powers. It will be interesting to see how the proposed new listing regime will be viewed internationally. There is also an outstanding question around how these proposals will fit in with the BEIS consultation on audit and director liability reform (for further on this, click here), as those proposals appear to be pulling the UK regulatory landscape for listed and very large private companies in a different direction.
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