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The Financial Conduct Authority CEO, Nikhil Rathi, has told The Times that he wants to cut red tape in the City, with plans to make it easier for companies to raise money on the public markets.
The latest changes mean that companies that are already trading on the stock exchange will not need to issue a prospectus outlining their business model and the potential risks they face in order to raise more money from investors, except in a few circumstances.
The change is the latest reform aimed at boosting the LSE, which saw more companies being taken over or leaving the exchange last year than new ones listing.
The FCA has already pushed through changes to the listing rules on the LSE, including measures such as removing the need for a shareholder vote on some takeovers. This is intended to make London more competitive with its rivals, particularly in New York.
The consultation on the changes to the prospectus rules suggested companies will be able to raise up to 75% of their value by issuing new shares without producing a lengthy and costly prospectus. Previously they were allowed to raise up to 20% before the need to issue a prospectus.
The FCA is also reviewing its 10,000-page rule book to cut red tape. Last week the FCA stated changes to one part of the rule book, covering how much capital firms must hold, would reduce the volume of legal text by 70%.
Rathi’s five-year term was due to end on 1 October, but earlier this month he was reappointed for a second five-year term and will now hold the position until September 2030.
Rathi said: “We’re about to put through some very significant reforms to prospectuses to make it much easier for companies who already have securities on the market to raise further capital. There’s a huge growth imperative we want to get moving. We’re moving really fast.
“A dynamic growing economy is going to produce companies that want to raise equity capital on public markets. When I speak to people, if we’re debating where they’re listing, the regulation [in London] now isn’t really coming up as an obstacle.”
