Listing New Securities

Eligibility for Listing on the Main Market

Introduction

Some recent history before we dive into the eligibility criteria for companies seeking an IPO on the London Stock Exchange’s Main Market: Part of the UK Government’s response to the perceived weaknesses of the regulatory framework in place at the time of the 2008 financial crisis has been to overhaul the regulatory regime for financial services in the UK. Through the passing of the Financial Services Act 2012, with effect from 1 April 2013, the responsibilities for regulating the UK’s financial services now rest with the Prudential Regulation Authority, the Financial Policy Committee of the Bank of England, and the Financial Conduct Authority (“FCA”).

The FCA is the body that determines eligibility for listing of equity securities on the Main Market and oversees the regulation and interpretation of the Main Market’s Listing Rules. The FCA has retained the title of “UK Listing Authority” (“UKLA”) and whilst the Listing Rules continue to evolve, their general framework and content remain much as they were before the passing of the Financial Services Act 2012. The content of an IPO prospectus is  driven largely by the EU Prospectus Directive of 2003, which was implemented in the UK in 2005. However, the Prospectus Directive does not purport to regulate the requirements for obtaining and maintaining a listing on any particular regulated market. As a result, the FCA is able to impose additional requirements for issuers seeking a listing on the Main Market.

On 30 November 2015, the European Commission proposed a new Prospectus Regulation (the "Proposed Prospectus Regulation") to repeal and replace the existing Prospectus Directive. In its Explanatory Memorandum to the draft Proposed Prospectus Regulation, the European Commission states that the proposed measures should:

  • reduce the administrative burden of drawing up a prospectus for all issuers and, in particular, for small and medium-sized enterprises, frequent issuers of securities and secondary issuances;
  • make the prospectus a more relevant disclosure tool for potential investors; and
  • achieve more convergence between the EU prospectus and other EU disclosure rules.

The revision of the existing Prospectus Directive pursues a simple goal: to provide all types of issuers with disclosure rules which are tailored to their specific needs while making the prospectus a more relevant tool of informing potential investors.

As at January 2016, the Proposed Prospectus Regulation is with the European Parliament and the Council of the EU for discussion and adoption. If adopted, it is expected that the Proposed Prospectus Regulation will enter into force later in 2016. Where applicable, key changes to the current prospectus regime envisioned by the Proposed Prospectus Regulation will be discussed throughout the course of this guide.

This chapter summarises the eligibility criteria for all equity securities seeking a listing on the Main Market and the additional criteria that may apply depending on which type of listing is being sought. There have been a number of changes in recent years to different types of listings available to companies on the Main Market. Since 2010, any company may apply for either a “premium” listing or a “standard” listing of its shares. A standard listing offers a company the opportunity to elect to list its securities on the Main Market, but on the basis of the minimum requirements of the Prospectus Directive rather than the obligation to meet the additional, or “super-equivalent”, criteria for companies seeking a premium listing. However, a standard listing does mean that a company is ineligible for inclusion in the prestigious FTSE UK Index Series, and that is a factor that a company would need to take into account when considering which listing to seek.

More recently, the London Stock Exchange introduced the high-growth segment of the Main Market on 27 March 2013, which is a response to the introduction of the JOBS Act in the United States. The high-growth segment is not a premium listing, but is designed for companies that may not currently satisfy all the criteria to obtain a premium listing but have the ambition to do so in the future. 2 The current eligibility criteria are contained in Chapters 2 and 6 of the Listing Rules. The requirements in Chapter 2 apply in respect of the listing of all securities, with those in Chapter 6 applying only to premium listings of equity securities.

When this Guide refers to the rules relating to issuers with a listing on the Main Market, unless otherwise stated, it is referencing the rules relating to issuers seeking, or having, a premium listing rather than the lighter regulations imposed upon those seeking a standard listing.

General Requirements for All Securities

The general eligibility requirements contained in Chapter 2 of the Listing Rules include the following:

i. Incorporation and Validity (LR 2.2.1 and 2.2.2) +
An applicant must be duly incorporated or otherwise validly established according to the relevant laws of its place of incorporation or establishment and must be operating in conformity with its constitution1. Note that the Listing Rules do not actually require an applicant to be a public company (although this may be a requirement under applicable corporate law, such as to facilitate future offers of shares to the public).

In addition, the securities to be listed must conform to the laws of the applicant’s place of incorporation, be duly authorised in accordance with the applicant’s constitution and have any necessary statutory or other consents.

ii. Admission to Trading (LR 2.2.3) +

There is a distinction between admission to listing on the Main Market and admission to trading, and in order to be eligible for listing, securities must also be admitted to trading on a Recognised Investment Exchange’s market for listed securities. Officially listed equity securities will typically be admitted to trading on the London Stock Exchange’s Main Market

iii. Transferability (LR 2.2.4 to 2.2.6) +
In order to be listed, securities must be freely transferable, fully paid and free from all liens and restrictions on the right of transfer (except any restrictions imposed for failure to comply with a notice under section 793 of the Companies Act 2006) (company investigations).

Unlike the equivalent requirement under the AIM Rules (see Chapter 5 for further details), the Listing Rules’ requirement for securities to be freely transferable is not subject to a carve-out to cater for overseas laws or regulations (e.g., where the laws of any jurisdiction, such as the US, place restrictions upon transferability of securities or where the issuer wishes to restrict transferability to limit the number of shareholders domiciled in a particular country to ensure that it does not become subject to statute or regulation). The UKLA has indicated2 that it would, in very limited circumstances, be willing to agree to certain restrictions on transferability. For example, the UKLA has on various occasions in the past few years permitted investment entities to include transfer restrictions in their articles to avoid falling within the ambit of onerous overseas legislative requirements. (However, it has required these restrictions to be carefully drafted and to specify the relevant legislative provisions in question—broad discretionary powers have not been permitted.) The other notable transfer restrictions permitted relate to protecting the public interest, such as in the context of defence-related assets. The UKLA’s guidance states that any such restrictions need to be considered carefully to ensure they do not offend the principle of equality of treatment of all shareholders if they do not generally treat shareholders equally. However, a power initiating a compulsory sell-down of shareholders is not likely to offend the principle of equality of treatment if shareholders are selected according to a fully disclosed pre-set formula and not by a power that allows management to individually choose shareholders.

iv. Market Capitalisation (LR 2.2.7 and 2.2.8) +
The expected aggregate market value of all securities (excluding treasury shares) to be listed by a new applicant must be at least £700,000 for shares and £200,000 for debt securities3. This minimum market capitalisation requirement may be modified by the FCA if it is satisfied that there will be an adequate market for the securities concerned.
v. Whole Class to Be Listed (LR 2.2.9) +
An application for listing of securities of any class must relate to all securities of that class issued or proposed to be issued. It is not possible to list only part of a class of securities.
vi. Prospectus or Listing Particulars (LR 2.2.10 and 2.2.11) +
Where required, a prospectus or listing particulars must be issued and approved in accordance with the Prospectus Rules or LR 4, as applicable.

Under the Prospectus Rules, an issuer seeking to admit “securities” to a regulated market (such as the Main Market) is required to publish a prospectus approved by the competent authority in its “home member state”.

As explained in further detail in Chapter 2 of this Guide, Chapter 4 of the Listing Rules requires listing particulars to be published for the listing of most specialist securities that fall outside the scope of the Prospectus Directive. The content requirements for listing particulars are broadly the same as those applicable to a prospectus.

Further details of the relevant approval and content requirements for a prospectus are set out in Chapters 3 and 4.

vii. Convertible Securities and Warrants/Options (LR 2.2.12 and 2.2.13) +
Convertible securities will be eligible for admission to listing only if the securities into which they are convertible are or will be listed or are securities listed on a regulated, regularly operating, recognised open market. The FCA may dispense with this requirement if it is satisfied that holders of the convertible securities have at their disposal all the information necessary to form an opinion about the underlying securities.

Requirements For The Premium Listing Of Equity Securities

In addition to satisfying the general eligibility requirements of Chapter 2 of the Listing Rules outlined above, an issuer seeking a premium listing of equity securities must comply with the further eligibility requirements contained in Chapter 6 of the Listing Rules:
i. Historical Financial Information (LR 6.1.3) +
An applicant must have unqualified audited accounts that cover at least three years ending no more than six months before the date of the relevant prospectus (and not more than nine months before the date the shares are admitted to listing). The accounts must have been audited in accordance with the applicable auditing standards and must not have been subject to a modified report (other than an emphasis-of-matter paragraph which arises in any of the earlier periods where the opinion on the final period is unmodified or where an emphasis-of-matter paragraph for the final period relates to a going concern but the company is able to satisfy the working capital requirements of LR 6.16)4.

The historical financial information required must represent at least 75 percent of the new applicant’s business for the full period required and put prospective investors in a position to make an informed assessment of the business for which admission is sought. In determining what amounts to 75 percent of an issuer’s business, the FCA will consider the size, in aggregate, of all of the acquisitions that the relevant issuer has entered into during the period covered by the financial information.

Where the new applicant has made an acquisition or series of acquisitions such that its own consolidated financial information is insufficient to meet the 75 percent requirement, there must be historical financial information relating to the acquired entity or entities which has been published or filed and that:

  • covers the period from at least three years prior to the date of the new applicant's own historical financial information up to the earlier of the date of the new applicant's historical financial information or the date of acquisition by the new applicant;
  • is presented in a form that is consistent with the accounting policies adopted in the financial information required to be presented in the prospectus;
  • is not subject to a modified report (except of a kind referred to above); and
  • in aggregate with its own historical financial information represents at least 75 percent of the enlarged new applicant’s business for the full period.

The FCA states that the purpose of these rules is to ensure that the issuer has representative financial information throughout the three-year track record period and to help prospective investors make a reasonable assessment of what the future prospects of the new applicant’s business might be. Investors are then able to consider the new applicant’s historical revenue-earning record in light of its particular competitive advantages, the outlook for the sector in which it operates and the general macroeconomic climate. The FCA may consider that a new applicant does not have representative historical financial information and that its equity shares are not eligible for a premium listing if a significant part or all of the new applicant’s business has one or more of the following characteristics:

  • its business strategy places significant emphasis on the development or marketing of products or services which have not formed a significant part of the new applicant’s historical financial information;
  • the value of the business on admission will be determined, to a significant degree, by reference to future developments rather than past performance;
  • the relationship between the value of the business and its revenue or profit-earning record is significantly different from those of similar companies in the same sector;
  • there is no record of consistent revenue, cash flow or profit growth throughout the period of the historical financial information;
  • the new applicant’s business has undergone a significant change in its scale of operations during the period of the historical financial information or is due to do so before or after admission; or
  • it has significant levels of research and development expenditure or significant levels of capital expenditure. 

Under LR 6.1.13, the FCA has the discretion to modify or dispense with the requirement for three years of historical financial information if it is satisfied that it is desirable in the interests of investors and that investors have the necessary information available to arrive at an informed judgment about the applicant and the equity shares for which a premium listing is sought.

Before modifying or dispensing with LR 6.1.3BR (this requires that the applicant's accounts be dated not more than six months before the date of the prospectus), the FCA must also be satisfied that there is an overriding reason for the applicant to be seeking a premium listing (rather than seeking admission to a market more suited to a company without sufficient historical financial information to be eligible for a premium listing). For these purposes, the FCA will take into account factors such as whether the applicant:

  • is attracting significant funds from sophisticated investors;
  • is undertaking a significant marketing of equity shares in connection with the admission and has demonstrated that having listed status is a significant factor in the ability to raise funds; and
  • has demonstrated that it will have a significant market capitalisation on admission.

 

ii. Independent Business and Controlling Shareholder(s) (LR 6.1.4) +
An applicant must demonstrate that it will be carrying on an independent business as its main activity. LR 6.1.4AG sets out guidance on the factors relevant to determining independence. Factors that may indicate that an applicant does not satisfy this requirement include where:

  • is attracting significant funds from sophisticated investors;
  • is undertaking a significant marketing of equity shares in connection with the admission and has demonstrated that having listed status is a significant factor in the ability to raise funds; and
  • has demonstrated that it will have a significant market capitalisation on admission

LR 6.1.4 reflects the FCA’s desire to ensure that the protections afforded to shareholders of premium listed companies are meaningful, and it has been widely interpreted as a response to a number of high-profile governance issues between controlling shareholders and particular companies. Where a new applicant will have a controlling shareholder upon admission, LR 6.1.4B requires there to be in place an agreement with the controlling shareholder to ensure that:

  • transactions and arrangements with the controlling shareholder (and its associates) will be conducted at arm’s length and on normal commercial terms;
  • neither the controlling shareholder nor any of its associates will take any action that would have the effect of preventing the applicant from complying with its obligations under the Listing Rules; and
  • neither the controlling shareholder nor any of its associates will propose or procure the proposal of any shareholder resolution which is intended or appears to be intended to circumvent the proper application of the Listing Rules.

In addition, the constitution of the applicant must allow for a prescribed dual voting structure in relation to the election and re-election of independent directors, further details of which are summarised on page 90.

A “controlling shareholder” is defined as any person who exercises or controls on his own or together with any person with whom he is acting in concert, 30 percent or more of the votes able to be cast on all or substantially all matters at general meetings of the company.

iii. Working Capital (LR 6.1.16 to 6.1.18) +
An applicant must satisfy the FCA that its group has sufficient working capital for at least the next 12 months from the date of publication of the prospectus5. Whilst, in most cases, the Prospectus Rules will require an issuer to include a “working capital statement” in its prospectus, a clean working capital statement is also an eligibility requirement for listing.

The Prospectus Rules require the inclusion of a working capital statement in all prospectuses for equity issues, including those issued by PRA or FCA-regulated entities, such as banks. Because much of a bank’s working capital funding (such as deposits) is not committed financing, such entities may have difficulty in providing the standard working capital statement. Whilst the FCA has not been able to alter the requirements of the Prospectus Directive, it has, for the purposes of determining eligibility for listing, set out an alternative for regulated issuers that is based on solvency and capital adequacy rather than traditional “working capital”. In line with the approach taken under the Prospectus Rules, the Listing Rules require regulated entities not only to meet their capital adequacy and solvency requirements, but to do so for the next 12 months without needing to raise further capital.

iv. Shares in Public Hands (LR 6.1.19 and 6.1.20) +
Twenty-five percent of the shares6 must, by no later than the time of admission, be distributed to the public in one or more EEA States. (Account may also be taken of holders in a non-EEA State if the shares are listed in the relevant state7.) Shares which are subject to a lock-up period of more than 180 days and shares held by directors, their connected persons, persons with the contractual right to nominate a director, trustees of an employee share scheme, and any person (or persons in the same group or persons acting in concert) with an interest in 5 percent or more of the shares of the relevant class will not be held in public hands for these purposes.

The FCA may accept an amount lower than 25 percent if it considers that the market will operate properly with a lower percentage in view of the large number of shares of the same class and the extent of their distribution to the public. LR 6.1.20AG sets out the factors that the FCA will take into account when determining whether the market will operate properly where less than 25 percent of the shares are in public hands in EEA States. These include: (i) shares held in non-EEA States, even where they are not listed; (ii) the number and nature of the public shareholders; and (iii) the expected market value of shares in public hands at admission being in excess of £100 million.

Issuers should note that eligibility criteria for the attractive FTSE UK Index Series include a firm 25 percent free-float requirement for companies incorporated in the UK and greater than 50 percent for non-UK companies.

v. Warrants or Options (LR 6.1.22) +
The total of all issued warrants or options to subscribe for equity shares may not exceed 20 percent of the issued equity share capital of the applicant8 as at the time of issue of the warrants or options (excluding rights under employee share schemes).
vi. Overseas Company Applying for a Premium Listing (LR 6.1.25) +
An overseas company applying for a premium listing must ensure that (whether by the law of the country of its incorporation or through its constitution) it provides pre-emption rights that are at least equivalent to those specified in LR 9.3.11 (as qualified by LR 9.3.12).
vii. Externally Managed Companies (LR 6.1.26 and 6.1.27) +
A company applying for a premium listing must ensure that the discretion of its board to make strategic decisions on behalf of the company has not been limited or transferred to a person outside the issuer’s group (such as an external management company) and that the board has the capability to act on key strategic matters in the absence of a recommendation from a person outside the issuer’s group (and does not, for instance, consist solely of nonexecutive directors).

Specialist Issuers of Securities

Other than in respect to investment entities, the Listing Rules include specific modifications to the eligibility criteria only for mineral companies and scientific-research-based companies—other specialist issuers will simply need to satisfy the general eligibility criteria. In addition to the eligibility requirements for listing, the FCA has stated that it will adopt the recommendations of the European Securities and Markets Authority (“ESMA”)9, which provide guidance on the interpretation of certain provisions of the Prospectus Directive and include recommendations for supplemental disclosure in the case of certain specialist issuers. These recommendations are referred to in more detail in Chapter 3 of this Guide.

The specific eligibility criteria applicable to specialist issuers are as follows:

i. Mineral Companies (LR 6.1.8 to 6.1.10) +

The definition of “mineral company” in the Listing Rules is wide and includes any company or group whose principal activity is, or is planned to be, the extraction (which can include exploration) of mineral resources (which include metallic and nonmetallic ores, mineral oils, natural gases, hydrocarbons and solid fuel).

A mineral company does not need audited accounts covering at least three years, but it must have published or filed historical financial information since the inception of its business. Such accounts must comply with the general criteria set out in LR 6.1.3: namely, that they have been independently audited, are less than six months old (as at the date of the prospectus) and have not been modified (except in very limited circumstances). A mineral company must also be able to demonstrate that it satisfies the independent business test set out in LR 6.1.4.

Where a mineral company is a new applicant to the Main Market and does not hold controlling interests in a majority (by value) of the properties, fields, mines or other assets in which it has invested, it must demonstrate that it has a “reasonable spread of direct interests in mineral resources and has rights to participate actively in their extraction, whether by voting or through other rights which give it influence in decisions over the time and method of extraction of those resources” (LR 6.1.10).

In addition, the ESMA Recommendations require certain additional disclosures, and in certain cases an expert’s report (in a form to be agreed with the relevant competent authority), in all mineral-company prospectuses. See Chapter 3 for further details.

ii. Scientific-Research-Based Companies (LR 6.1.11 and 6.1.12) +

Similarly, a scientific-research-based company does not need audited accounts that cover at least three years, but it must have published or filed historical financial information since the inception of its business. Such accounts must have been independently audited, must be less than six months old and cannot have been modified (except in very limited circumstances). A scientific-research-based company must also be able to demonstrate that: (i) its historical financial information represents at least 75 percent of its business for the full period; and (ii) it satisfies the independent business test set out in LR 6.1.4.

However, whilst there is no longer a requirement, for example, to have a technical expert’s report, there are additional eligibility requirements for scientific-research-based companies that do not have audited accounts covering at least three years. Such a company must:

  • demonstrate its ability to attract funds from sophisticated investors;
  • intend to raise at least £10 million pursuant to a marketing at the time of listing;
  • have a capitalisation before the marketing at the time of listing of at least £20 million (based on the issue price and excluding the value of any securities that have been issued in the six months prior to listing);
  • have as its primary reason for listing the raising of finance to bring identified products to the stage where they can generate significant revenues; and
  • demonstrate that it has a three-year record in laboratory research and development, including details of patents granted or details of progress of patent applications and the successful completion, or the successful progression of, significant testing of the effectiveness of its products.

Therefore, whilst the Listing Rules offer a concessionary route for scientific-research-based companies that do not have a three-year track record, any applicant relying on this route must be able to satisfy all of the conditions of LR 6.1.12. Any waiver of these conditions would be viewed by the FCA as an effective waiver of the requirement of a three-year track record, which as a fundamental eligibility condition would very rarely be allowed by the FCA.

The ESMA Recommendations require various additional disclosures for prospectuses issued by scientific-research-based companies, including details of the relevant collective expertise and experience of the key technical staff and a comprehensive description of each product whose development may have a material effect on the future prospects of the issuer. (See Chapter 3 for further details.)

iii. Investment Entities +

Chapter 15 of the Listing Rules presents a single platform for all listed closed-ended vehicles, which include investment trusts, investment companies, venture capital trusts and property investment companies, whilst Chapter 16 deals with all rules regarding open-ended investment funds. All investment entities are required to seek a listing under either Chapter 15 or Chapter 16 (even if they already have a primary listing on another exchange).

Closed-ended investment funds

For closed-ended investment funds, an applicant for listing does not need audited accounts that cover at least three years, nor does it need to satisfy LR 6.1.4 (independent business). However, it must satisfy the following requirements:

  • Investment activity (LR 15.2.2 to 15.2.4): An applicant must invest and manage its assets in a way that is consistent with its objective of spreading risk. The applicant’s group must not conduct any trading activity that is significant in the context of its group as a whole, although this does not prevent the businesses forming part of its investment portfolio from conducting trading themselves.
  • Cross-holdings (LR 15.2.5): No more than 10 percent, in aggregate, of the value of an applicant’s total assets may be invested in other listed closed-ended investment funds, although this limit does not apply to investments in closed-ended investment funds that have published policies of investing no more than 15 percent of their total assets in other listed closed-ended investment funds.
  • Feeder funds (LR 15.2.6): An applicant that is a feeder fund must ensure that the master fund’s investment policies are consistent with its own published investment policy and that the master fund invests and manages its investments in a way that is consistent with the applicant’s published investment policy and spreads investment risk.
  • Investment policy (LR 15.2.7): An applicant must have a published investment policy that contains information about the policies which the closed-ended investment fund will follow relating to asset allocation, risk diversification and gearing and that includes maximum exposures.
    Independence (LR 15.2.11 to 15.2.13A): The applicant’s board of directors or equivalent body must be able to act independently of the investment manager.

Open-ended investment companies

There are very few eligibility criteria for applicants that are seeking a listing as an open-ended investment company under Chapter 16 of the Listing Rules, although it must retain a sponsor for the purposes of its application.

The Specialist Fund Market

Complementary to the FSA’s implementation of the final changes to the regime for investment entities, the London Stock Exchange launched the Specialist Fund Market (“SFM”) in November 2007 to provide a separate, clearly labelled market tailored for highly specialised investment entities such as single-strategy hedge funds, private-equity funds and feeder funds. The SFM aims to bridge the gap between the Main Market regime and AIM. It is a regulated market, so unlike AIM, admission to it does require a prospectus, but the full Listing Rules do not apply.

Issuers on the SFM are required to comply with the existing Admission and Disclosure Standards (the "Standards"). In December 2015, the LSE proposed certain amendments to the Standards which include:

  • renaming the SFM to "the Specialist Fund Segment" to clarify that it is a segment of the LSE’s regulated market;
  • adding a new early notification requirement whereby an applicant who wants to admit equity securities will have to notify the LSE no later than when it provides its eligibility letter to the UKLA (or at least 20 business days prior to the proposed admission to trading on the Specialist Fund Segment); and
  • adding schedules which contain further detail on the admission process and criteria for the SFM.

The final rules are expected to be confirmed in early 2016 following a market-wide consultation by the LSE.

iv. Property Companies and Shipping Companies +

Although the Listing Rules do not contain any specific requirements for property or shipping companies, the ESMA Recommendations do contain additional content requirements for prospectuses issued by property and shipping companies (including a valuation report). (See Chapter 3 of this Guide for further details.) In relation to UK real estate investment trusts (“REITs”), the FCA has clarified that a REIT may, depending on its business model, be eligible for a premium listing under Chapter 6 of the Listing Rules, a standard listing under Chapter 14, or a premium listing for closed-ended investment funds set out in Chapter 15 of the Listing Rules. The key determinant will be whether the company is a risk-spreading investment vehicle or a more traditional property company that does not aim to spread risk. If it is a risk-spreading vehicle, then it should apply for the premium (closed-ended investment funds) listing under Chapter 15.

v. High Growth Segment +

The London Stock Exchange introduced the High Growth Segment in March 2013 to provide an additional route to listing for medium and large high-growth companies. The High Growth Segment has regulated market status but is not part of the FCA’s Official List, so the Listing Rules do not apply. Issuers on the segment are required to comply with the London Stock Exchange’s High Growth Segment Rules and existing Admission and Disclosure Standards. EU directive standards, including the Prospectus Rules and the Disclosure and Transparency Rules (“DTR”), also apply. 

In order to join the High Growth Segment, an issuer must: (i) be incorporated in the EEA; (ii) be a revenue-generating trading business; (iii) demonstrate growth in revenues (on a CAGR basis) of at least 20 percent over the three-year period prior to admission; (iv) have a free float of at least 10 percent; (v) appoint a “Key Adviser” in relation to admission; and (vi) set out an intention to join the listed segment of the Main Market over time.

In December 2015, the London Stock Exchange proposed to amend the High Growth Segment Rules, notably by adding an exemption for life science companies. It proposed that where a company is classified as a "scientific research issuer”, the London Stock Exchange may, at its sole discretion, modify or dispense with the requirements that the issuer must be a trading business and demonstrate growth in revenues (on a CAGR basis) of at least 20 percent over the prior three financial years. The London Stock Exchange acknowledged that the revenue growth test is not a relevant test for scientific research based issuers, although it considers that it is appropriate for such companies to have access to the High Growth Segment. The final rules are expected to be confirmed in early 2016 following a market-wide consultation by the London Stock Exchange.

Overseas Issuers

In the case of the securities of a company incorporated in a non-EEA State that are not listed in its country of incorporation or in the country in which the majority of its shares are held, the FCA will need to be satisfied that the absence of the listing in that jurisdiction is not due to the need to protect investors.

In general terms, overseas companies with a premium listing on the Main Market are required to comply with the Listing Rules in full to the extent that they are permitted to do so.

It is generally possible for an issuer incorporated outside the UK to be assigned UK “nationality” for purposes of the FTSE UK Index Series, provided that it publicly acknowledges adherence as far as practicable to the principles of the UK Corporate Governance Code, the pre-emption rights and the UK Takeover Code and, as mentioned above, has a free float greater than 50 percent.

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