New FSA guidance on listing decisions

Under chapter 25 of UK listing rules companies wishing to go public must have three-year trading history, supported by its historic revenue earning record.

This rule was amended a ‘number of years ago’ allowing predominantly hi-tech companies to list without fulfilling all the requirements, upon consideration by the UK Listing Authority (now part of the FSA).

This has been extended to companies across all sectors, but following concerns from respondents about the ‘significant amount of subjective decision-making’ required in making such a judgement, the FSA has released additional disclosure requirements in the form of a guidance note.

In addition to a complete financial record, companies wishing to list may be forced to disclose market research, financial projections and show ‘road show presentations’.

Other requirements include the disclosure of non-financial operating data and a detailed plan of the company’s strategic objectives and business development prospects.

These guidelines also apply to companies that had three-year trading records, but do not fulfil the other requirements of the listing rules.

The City Watchdog said this would ensure investors have the ‘necessary information available to arrive at an informed judgement concerning the applicant and the securities for which listing is sought’.

A spokesperson for the FSA told that, previously, the decision whether a company was admitted to the LSE was based only upon the FSA’s own judgement.

Humphris said the note was aimed at removing some of this subjectivity, adding that the decision to approve a listings request was ‘not automatic’.

The full guidance note can be read in the FSA’s Consultation paper 105 – Proposed changes to the listing rules.


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