Shearman & Sterling LLP | FinReg | UK Public Offers and Admissions to Trading Regulations Published
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  • UK Public Offers and Admissions to Trading Regulations Published

    On January 29, 2024, the Public Offers and Admissions to Trading Regulations 2024 (SI 2024/105) were published. The Regulations implement the new Public Offers and Admission to Trading Regime, part of the new designated activities regime, and revise the existing prospectus regime inherited from the EU that currently sits in the U.K. Prospectus Regulation. The designated activities regime (DAR) is a new U.K. concept to give the Financial Conduct Authority rulemaking powers over financial sector activities, such as public offers and listing, which are not necessarily carried out by regulated firms such as banks (we discussed the DAR in our client note, "A Boost For UK Financial Services"). The new Regulations introduce a general prohibition on public offers of securities, coupled with a collection of exceptions from this prohibition. Many of the existing exemptions in the U.K. Prospectus Regulation, such as offers solely to qualified investors and offers made to fewer than 150 persons, are retained. Certain provisions, such as those establishing the new designated activities and provisions enabling the FCA to make rules, came into force on January 30, 2024. Most of the other provisions will enter into force once the U.K. Prospectus Regulation is revoked using powers under the Financial Services and Markets Act 2023. The FCA has engaged with stakeholders regarding many of the changes that will be housed in its rulebook in the future. It is expected to publish a consultation paper in Summer 2024 on its detailed proposals.

    New designated activities under the DAR are established by the Regulations, which generally are: offering transferable securities to the public and seeking admission of transferable securities to trading on a regulated market or a multilateral trading facility (MTF). These provisions entered into force on January 30, 2024. The Regulations enhance the FCA's powers to make rules for the admission of securities to trading on U.K.-regulated markets, covering for example, requirements relating to prospectus content, persons responsible for a prospectus and withdrawal rights. The FCA will be given rulemaking powers over "primary" MTFs (i.e., those which operate as primary markets, allowing companies to issue new capital), including requiring an "MTF admission prospectus" for issuances on primary MTFs open to retail investors, and in relation to "retail or non-retail" primary MTFs, requirements on the admission prospectus responsibility, withdrawal rights and the application of the prospectus advertising regime. Primary MTF operators will be responsible for setting specific content requirements for MTF admission prospectuses when an admission prospectus is required and the process for approving prospectuses.

    The regime for public offers of securities that are not admitted to trading is revised. The existing prospectus regime requires public offers of €8 million or more to be accompanied by a prospectus, unless a relevant exemption applies. This has tended to restrict those willing to raise capital above this threshold. Under the new rules, no prospectus will be required, but unlisted public offers of £5 million or more must be made through a public offer platform or rely on other exemptions. Operating a public offer platform will become a new regulated activity for which advance FCA permission must be obtained.

    In addition, certain non-transferable securities are brought within the scope of the new regime for public offers, and offers of those securities must be made through a public offer platform. This change to the scope of the regulatory perimeter arose out of lessons learned from the London Capital & Finance scandal.

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