Admission to Stock Exchange

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.

Approved Sponsors

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.

Public Limited Company obligations

Public limited company (PLC) obligations continue after admission to Stock Exchange. Thus, your PLC must continue to comply with the listing rules. The United Kingdom Listing Authority requires PLC to comply Chapter 9 of the Listing Rules at all times.

UKLA Rules to follow

Your public limited company obligations include:

  • Avoid a false market in your company’s shares.
  • Give notice of the date of a board meeting at which your directors will decide on the payment of dividends and their decision.
  • Announce preliminary profits and losses for the year once your board of directors has given approval for the figures.
  • Publish information about certain acquisitions and realisations of assets including the purchase by your company of its own shares.
  • Comply with the detailed provisions of the Listing Rules as to the content of your company’s annual report and accounts which includes your obligation to prepare half-yearly company accounts.
  • Give details of any changes in the board of directors, as well as adopting rules on dealings by your directors in your company’s shares which contained in the Model Code on directors’ dealings as spell out in The Listing Rule 9. The code prevents directors from abusing their position and insiders dealing.

Public limited company obligations with Companies House

In addition, your PLC must also deliver audited company accounts and financial statements to Companies House. Accordingly, your audited company accounts must reach Companies House within six months after your accounting year ended. Otherwise, your PLC will receive an automatic late filing penalty. The penalty starts from £750 to £7500.

Another compulsory filing your PLC must file is the Confirmation statement.

Trading certificate

A Public Limited Company (PLC) must apply for a Trading certificate before starting trading.

Apply a trading certificate for your PLC

Universally, your PLC must satisfy the authorized minimum share capital requirement. Which is the nominal value of your PLC’s allotted share capital must be at least £50,000 or €65,600. However, your PLC cannot satisfy the share capital requirement by a combination of euro and sterling shares or by shares in any other currency.

Consequently, your PLC must deliver the form SH50 to Companies House and includes the following information.

  • State whether your authorised minimum share capital requirement will be satisfied in sterling or in euros.
  • You specify the amount, or estimated amount, of your company’s preliminary expenses.
  • Specify any amount or benefit paid or given, or intended to be paid or given, to any promoter of your company. This includes the consideration for the payment or benefit.
  • Provide a statement of the aggregate amount paid up on your company shares on account of their nominal value.
  • Be accompanied by a statement of compliance. The statement of compliance is a statement that your company meets the requirements for the issue of a certificate under section 761 of the Companies Act 2006. The registrar may accept the statement of compliance as sufficient evidence of the matters stated in it.

Exemption from a trading certificate

On the other hand, your PLC is not required to apply for a trading certificate, if your company is upgrading its status from a private to public limited company status.

However, when re-registering your private limited company to a public limited company. The nominal value of your PLC’s allotted share capital must be at least meet the authorised minimum share capital requirement. Additionally, the authorised minimum share capital requirement must be satisfied either entirely in sterling shares or entirely in euro shares.

Seal a deal or borrow money

In the event, your PLC does business or exercises any borrowing powers in contravention of section 761 of the Companies Act 2006. In this instance, you have committed an offence. Your company and every officer of your company is in default.

Conviction and fine

A person guilty of an offence under section 767 subsection (1) of the Companies Act 2006 is liable:

(a) on conviction on indictment, to a fine;

(b) on summary conviction, to a fine not exceeding the statutory maximum.

The transaction still valid

A contravention of section 761 does not affect the validity of a transaction entered into by your company, but if your company

(a) enters into a transaction in contravention of that section, and

(b) fails to comply with its obligations in connection with the transaction within 21 days from being called on to do so, the directors of your company are jointly and severally liable to indemnify any other party to the transaction in respect of any loss or damage suffered by him by reason of your company’s failure to comply with its obligations.

Who is liable?

Your directors who are so liable are those who were directors at the time your company entered into the transaction.

On the other hand, your PLC must also deliver its company accounts and confirmation statement to Companies House on time.

Pros and cons of admission to Stock Exchange

There are pros and cons of listing your public limited company (PLC) with The Stock Exchange to consider carefully. After admission to the Stock Exchange, the public would be able to buy and sell your company shares on the Stock Exchange easily and freely.

The pros of listing

Company shares

Your company shares are publicly traded on the Stock Exchange. Your company share value could go skyrockets when the public has confidence in your products and services.

The fact of being a listed company may improve the status of your company within the market in which it operates.

Future capital

Your company would be able to raise a future source of finance by issuing new shares to raise additional monies in addition to borrowing money from a bank.

This is for an acquisitive company that wishes to grow by means of acquisitions, you may be able to offer your quoted shares as full or part payment of the purchase price for the company you are acquiring. It is an attractive and cost-efficient alternative to borrowing money or using your own cash reserves.

Access to potential investors

Your company would have access to a wide range of potential investors in the sense because all your company shares, including minority shareholding, are freely tradeable on the Stock market.

Plus, there are various prohibitions by law to prevent insiders trading. Thus, this will prevent to abuse of your company’s sensitive information for personal’s benefit.

The cons of listing on the Stock Exchange

Approved sponsor

Your PLC would need to engage an approved sponsor to assist you when seeking premium listing and admission to the Stock Exchange. Your approved sponsor must have the skills and experiences of listing companies. Furthermore, they must be registered with the Financial Conduct Authority. You cannot just hire any firm of accountants to assist you with your premium listing.

3 years clean financial statements

Your company have must at least three years of audited financial statements and preferably all your financial statements are issued with unqualified audit report prior to admission thereafter your company must submit financial statements and company accounts every six months.

Cost of maintaining a listing

Seek and maintain a listing can be an expensive exercise.

Firstly, your company will have to accept the imposition of restrictions over and above those imposed on your company by the Companies Acts. For example, your company secretary must have a minimum professional qualification. He/she can handle Companies House filings such as confirmation statement and other notifiable events.

On top of that, your company also subject to other legislation which affects public listed companies. This is the price to pay for your company shares being made more easily marketed.

Disclose your company performance

Your company has the obligation to make public information relating to your current performance and future prospects. This will give your company’s current and potential future shareholders adequate information on which to base their decisions on how to deal in your company’s shares.

Be the takeover target

Your company could be the target of a take-over by an acquisitive company. Your potential bidder is able to acquire a stake in your company through the open market. However, there are a number of mechanisms in place to ensure that your company is aware if it is the target for a potential bid.

Share prices fluctuate

Your company activities become the subject of much closer scrutiny by both their shareholders and other interested parties. This includes potential investors and the press. At the same time, your company share price will depend on the market’s view of your value. Thus, your share price can fluctuate, sometimes dramatically, in response to both good and bad news about your company.

Knowing the pros and cons of listing on the Stock Exchange would help you to plan better.

Approved Sponsor

Public limited company (PLC) seeking listing in the Stock Exchange Market must use an Approved Sponsor registered with Financial Services Authority to handle your listing application with the UK Listing Authority namely the London Stock Exchange.

Approved Sponsor must be a person or a firm with relevant knowledge and qualifications to undertake your PLC listing representation. He or the firm must

  • be an authorized person or a member of a designated professional body.
  • Be competent to provide a sponsor service per Listing Rule 8.
  • Have systems and controls in place to carry out the role as a Sponsor per the Listing Rule 8.

The role of your sponsor is to ensure your PLC comply with the listing rules. They also provide guidance throughout your PLC flotation period. Your approved sponsor work closely with FCA too.

Your Sponsor must have good knowledge of the Companies Act apply to a public limited company. For examples, a PLC cannot file unaudited company accounts. Know what information is important when comes to filing the confirmation statement and so on.

You may contact the Financial Conduct Authority for a list of sponsors if you are considering listing your public limited company at the London Stock Exchange.

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