Press Release 114 : HM Treasury’s Call for Evidence re Review of UK Listing Rules

Press release 114 – Joint Press Release from ShareSoc & UKSA on behalf of individual investors: HM Treasury’s Callfor Evidence re Review of UK Listing Rules

    ShareSoc and UKSA recommend:

    1. AIM should be regulated by the FCA, not the LSE.
    2. Do not relax standards in the UK. We need to stop even more frauds, scams and scandals.
    3. Remove €8m limit in placings; and open up placings to all.

    The LSE has a poor track record on enforcement and is not is the appropriate body to specify the AIM market rules. There is an inherent conflict between the commercial interests of the LSE to quote as many companies on AIM as possible, with the need for effective regulation. This conflict would be removed if the FCA were responsible for determining and enforcing AIM market rules (as well as the main market listing rules). In addition, the FCA has powers to prosecute criminal offences, unlike the LSE, and could more strongly enforce breaches and provide stronger sanctions against responsible individuals.

    Cliff Weight, Director of the powerful shareholder group ShareSoc said “The idea that somehow the UK market can be improved by relaxing the standards applicable to listings is utterly misguided and little more than a failing business model seeking a race to the bottom. It is noticeable that this review has focussed on what can be done to make the UK a more attractive regime for companies to list, where perhaps a more important consideration is what can be done to make the UK a more attractive regime in which to invest. The key point is that the stock market is now global, the marginal costs of investing in UK shares are excessive, and the returns from UK shares have been below average.”

    Any review of the UK listing regime should focus primarily on what can be done to build an exchange fit for the 21st century, and who is best placed to deliver the innovation that can reverse 20 years of decline. An exchange that aimed to facilitate the movement of capital with minimal marginal costs would have no problem attracting leading global companies.

    We note and wish to draw attention to the following factors that we believe impact on the effectiveness of the UK markets:

    1. Low valuations of UK market. Companies choose to list in US where the valuations are higher.
    2. Lack of tech companies in UK stock market. In particular there is a lack of large companies. We do not have any FANGS. We have lots of small start-ups. There appears to be a problem of scaling them up. We think the short termism of fund managers in the UK and the low valuation that the UK market gives companies are contributory factors.
    3. Low liquidity and large spreads.

    The €8m rule should be abolished entirely for companies which are already listed. Individual investors should be allowed to participate in placings by existing listed companies without any need for a prospectus.

    Once a company is listed, it makes no sense that any investor can buy any quantity of shares in the secondary market, but that an overall limit (€8m) should apply to primary issuance to a particular class of investors. Rather than requiring an additional prospectus, existing rules on disclosure and making misleading statements should be strictly enforced, with strong penalties for directors who breach those rules. Consideration should be given to stronger penalties and criminal sanctions for more egregious cases.

    For further information please contact

    Cliff Weight, Director, ShareSoc

    Information About ShareSoc and UKSA

    ShareSoc and UKSA represent the views of individual investors. In addition to our own members, 6 million people own shares or have investment accounts with platforms in the UK. The Office for National Statistics estimates that at the end of 2018 UK-resident individuals held 13.5% of the UK stock market, up by 1.2% from 2016 and moving away from the historical lows of 10.2% in 2008. In 2020, the Financial Times estimated that 15% of the UK stock market is held by individual shareholders. In addition to this there are many more who have money invested in shares via funds, pensions and savings products such as employee share ownership schemes. See

    ShareSoc, the UK Individual Shareholders Society

    ShareSoc is the UK’s largest retail shareholder organisation acting in all areas of the UK stock market more than 7,000 members. It is a not for profit company. ShareSoc is dedicated to the support of individual investors (private shareholders as opposed to institutional investors). We aim to make and keep investors better informed to improve their investment skills and protect the value of their investments. We won’t shirk from tackling companies, the Government or other institutions if we think individual shareholders are not being treated fairly. See

    UKSA, The UK Shareholders’ Association
    UKSA is the oldest shareholder campaigning organisation in the UK. UKSA is a not for profit company that represents and supports shareholders who invest in the UK stock market. See

    Click here for our full response to the Call for Evidence (12 pages).



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