A new prospectus regime and other developments impacting UK Equity Capital Markets in 2025

2024 was a year of significant change for the UK equity capital markets, with the new UK Listing Rules coming into effect at the end of July. Amongst other changes the new UK Listing Rules abolished the old two-tier structure of the Official List, comprising the premium and standard listing categories, and established a single listing category, the Equity Shares (Commercial Companies) (ESCC) category for commercial companies. There were also significant changes to the rules on class transactions and related party transactions which no longer require shareholder approval. We had the pleasure of working with some fantastic clients throughout the year.

Highlights for us included:

• Acting for Panmure in its role as joint bookrunner, corporate broker and corporate adviser on a fundraise for AQSE listed Equipmake plc. Equipmake is a UK-based engineering specialist pioneering the development and production of electrification products across the automotive, aerospace, bus, and coach industries.
• Acting for Allenby Capital in its role as broker on a fundraise for AIM listed Fusion Antibodies plc. Fusion Antibodies specialises in pre-clinical antibody discovery, engineering and supply for both therapeutic drug and diagnostic applications.
• Advising Main Market listed HeiQ plc, a leading company in materials innovation and hygiene technologies, on a fundraise and convertible loan note issue.
• Advising Main Market listed First Tin plc on a fundraise to further expand its mining operations.
• Advising AIM-listed Prospex Energy on a fundraise to acquire a strategic stake in the Viura producing gas field in northern Spain.
• Acting for AIM and AQSE quoted Invinity Energy Systems plc on its redomiciliation from Jersey to England & Wales by way of a Jersey court approved scheme of arrangement and related reduction of capital.

Our capital markets offering was also strengthened in the Summer by the addition of Ahmad Anani, who joined the Firm as head of our Middle East Capital Markets and Regulation team in Qatar. 

IPO activity across the UK equity capital markets remained sluggish throughout 2024, however, there are signs that a resurgence may be coming soon, with numbers starting to pick up by the end of the year. With that in mind, we are looking forward to 2025 with optimism and anticipation, with the key development this year being the upcoming changes to the prospectus regime.

Prospectus Regime

In the wake of Brexit, the UK embarked on a mission to reform its capital markets, making them more accessible and competitive. As part of this approach the Public Offers and Admissions to Trading Regulations 2024 (POATRs) were enacted in January 2024. The POATRs established in secondary legislation the regulatory framework for a new prospectus regime which, once implemented, will replace the current UK Prospectus Regulation. In July 2024, the Financial Conduct Authority (FCA) published a consultation proposing rules for a new public offers and admission to trading regime, under powers delegated to the FCA by the POATRs. 

The proposed changes aim to simplify the complex prospectus regime inherited from the EU, reducing the burden on issuers while ensuring that investors continue to receive sufficient information. Key changes to the prospectus regime include amendments to a number of exemptions, including the threshold for triggering a prospectus for secondary issuances by listed issuers, which will be increased significantly from 20% of existing listed securities to 75% over a 12-month period and reducing the EUR 8 million threshold for non-listed issuers to £5 million. For non-regulated markets, such as AIM and AQSE Growth, an MTF Admissions prospectus would be required. For a more detailed summary of the proposed changes see our article on the FCA Consultations on the prospectus regime. The FCA’s consultation closed in October 2024, with final rules expect to be produced by the end of H1 2025.

The POATRs also provided a framework for a public offers platform (POP), with the FCA consulting separately on this. This would facilitate securities offerings of over £5 million by issuers that are not listed or traded on any stock market  Operators of a POP would require FCA authorisation and will be subject to fairly onerous obligations in relation to information gathering and due diligence on prospective issuers. While some crowdfunding platforms may wish to be POPs, it is not obvious that the new regime will attract many new entrants to this market. The consultation was in parallel with the proposed changes to the prospectus regime but without an indication on final rules. 

What else is coming up in 2025?

UK businesses will face a lot of challenges in 2025. Increases in National Insurance Contributions, the National Minimum Wage and business rates will put pressure on costs, and regulatory burdens are likely to increase due to the ongoing implementation of the Economic Crime and Corporate Transparency Act 2023 and future implementation of the Employment Rights Bill (expected in 2026). Companies on the UK capital markets or considering listing will also need to keep an eye on other regulatory developments, including the implementation of the proposed Private Intermittent Securities and Capital Exchange System (PISCES).

PISCES is expected to come live in H2 2025 and will enable the operation of regulated intermittent trading platforms for unlisted and unquoted private and public companies. PISCES will operate as a secondary market, facilitating the trading of existing shares. As companies remain private for longer, admission to trading on a PISCES platform may provide such companies with a way to meet the liquidity needs of a growing shareholder base and encourage employees to invest. In November 2024, the Government issued its response to an earlier consultation on PISCES, alongside draft legislation. The FCA also provided an early Christmas present on 17 December 2024, with publication of Consultation Paper 24/29, which sets out its proposed framework to implement and oversee PISCES, including bespoke disclosure rules. The London Stock Exchange are devoting a lot of resources to private markets and to PISCES in particular, which makes this an exciting development. We will be tracking how the PISCES rules develop and will keep you updated on these developments as they progress.

We understand that with all this change comes complexity, and our goal is to help demystify the upcoming changes, providing clarity and confidence to our clients. Whether you are considering listing on the UK capital markets, exploring the possibilities of PISCES or capital raising through a public offer platform, we are here to support you and your strategic goals.