Britain has launched a review into speeding up how listed companies can raise funds on stock markets. This is its latest move to keep London at the forefront of global financial centres after Brexit. Britain’s markets raised 30 billion pounds in new equity. This is as the companies sought to shore up their finances during the pandemic. Most businesses chose to raise funds through faster private placings. This is with a small group of institutions, rather than using the stock market.
The review will look at how technology could ensure shareholders get information faster and reduce the period during which they exercise their rights. Mark Austin, a lawyer at Freshfields law firm who will chair the review for the finance ministry stated that the opportunity exists to facilitate a quicker and more efficient process of raising capital for existing listed companies and more easily to involve retail investors. Britain has already completed a review of the primary listings market. The regulators are expected to finalise rules, and this makes it easier for companies to float and help London to compete better in tech listings with New York.
The primary listings review was by the former European Commissioner Jonathan Hill. This recommended the secondary capital market could be improved by re-establishing the 2008 Rights Issue Review group. That group of Bank of England, regulators and industry representatives had recommended investigating more accelerated rights issue models. This includes those used in Australia. Hill said that since 2008 financial markets had been transformed by technological innovation that would allow alternative measures to be taken to improve secondary capital raising. Austin will look at Australia’s use of cleansing notices which update the market on new corporate information. This is to avoid having to issue a prospectus, a time-consuming and expensive undertaking. Austin will make recommendations to the government in Spring 2022.