Public limited company must comply with the Admission to Stock Exchange listing rules before they are allowed to trade their shares publicly.
Your public limited company must provide information which satisfies the listing requirements. In this case, the Financial Services Authority set the rules and also governs public companies in the United Kingdom.
The Financial Services Authority is acting as the United Kingdom Listing Authority or UKLA.
Overall, there are two types Stock Exchange markets in the United Kingdom. The Senior Equity Market and the Alternative Investment Market (AIM).
Senior Equity Market
The Senior Equity Market is for larger public companies. It is also known as the Official List.
Alternative Investment Market
The Alternative Investment Market is the secondary stock market. It is opened to smaller companies in the United Kingdom.
Ordinarily, your public limited company must meet the following criteria in order to be eligible for admission to stock exchange in London.
Firstly, your company must be registered as a public limited company. Secondly, it must intend to place on the market shares which are expected to have a market value of £700,000 or more.
3 years preceding company accounts
Your company must have filed 3 years company accounts previously with Companies House. In addition, your company accounts must be audited. Preferably with unqualified audit report attached.
To put it simply, your company will not be admitted to stock exchange if it has not filed accounts covering three years preceding to your application for listing in the Stock Exchange.
Most importantly, your directors must consider that your company is financially viable. Furthermore, your company must have sufficient working capital.
This admission requirement is satisfied by your Approved Sponsor to the issue. Usually, a merchant bank or stockbroker with overall responsibility for arranging the issue. This includes sending a letter to the United Kingdom Listing Authority stating that your directors have made careful enquiries to satisfy themselves and the Approved Sponsor that the working capital is indeed adequate.
The final principal admission requirement is that your company intend that at least 25% of any class of shares will be in the hands of the public. This is a must and it is spelled out in The Listing Rules.
Thereafter, your company must also satisfy the listing particulars requirements. Subsequently, your company must prepare and publish a prospectus which complies with Chapter 5 and 6 of The Listing Rules.
Correspondingly, you company must publish the following information.
- Information on the shares which are to be listed.
- Your share or loan capital.
- Principal activities.
- Place of business and employees.
- Company’s finances. In the form of balance sheet and profit and loss accounts for the last three years. Also, management and on trends in the company’s business.
On the other hand, your company need to include a statement in your prospectus that your company accounts have been audited for the last three financial years. Furthermore, the people responsible for the prospectus need to make a declaration. To the effect that to the best of their knowledge, the information given in that part of the prospectus for which they are responsible is in accordance with the facts and contains no admissions likely to affect the import of the prospect us.
Additionally, you must also disclose if there is changes in your auditors in the previous three years. In this case, the details of audit options, tax clearances, and the terms of the directors’ service contracts.
Above all, your information in the prospectus should not be misleading, false or deceptive. Otherwise, your public limited company will incur both civil and criminal liability under the Financial Services and Markets Act 2000 if evidence supporting materials errors on the prospectus is established. In other words, do not even try to mislead your potential investors and manipulate the information on your prospectus.