UK Government Proposes Power to Block Listings on National Security Grounds

Following the commitment by the government in its 2019 Economic Crime Plan to investigate the links between listings and national security, HM Treasury has launched a consultation in which it proposes to introduce a power for it to block listings on national security grounds. The government has assessed that there is a "remote but possible risk" that a company listing in the U.K. could harm the nation's security and that this risk needs to be addressed. Responses to the consultation may be submitted until August 27, 2021.

It is proposed that the scope of this power will include all initial equity listings and admissions on U.K. public markets. The power would not apply to secondary trading and would not include listed debt, other than certain convertible securities. Therefore, the power could be applied to: (i) shares, securities representing equity such as Global Depositary Receipts and convertible securities; (ii) regulated markets and MTFs, including the SME Growth Markets, that allow primary equity listings; and (iii) initial public offerings and non-traditional listings structures, such as introductions and Special Purpose Acquisition Companies (SPACs). The power would also not apply to delisting already listed companies.

An issuer would need to provide additional disclosures about itself, its business, the major shareholders, management and the offering. While some of these disclosures will already be made during the listing or admission process, some companies could face increased disclosure requirements even though they benefit from a prospectus exemption. For companies that would like to have assurances before choosing to list in the U.K., the government is considering an early disclosure option.

View the consultation paper.

View details of the Lord Hill Listing Review.

View details of the government's response to the Hill recommendations.

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