"High-growth companies are currently underrepresented on the London Stock Exchange."
The Government has developed, together with London Stock Exchange ("LSE"), a set of proposals intended to encourage a greater number of high-growth companies to list in the UK. It is hoped that lowering the regulatory burden for high-growth companies wishing to IPO will make the UK an attractive place to list and the provision of public equity to small and mid-sized high-growth companies will, in turn, boost growth, innovation and employment.
The proposals come partly as a response to the US JOBS Act, which itself lowered the regulatory burden for high-growth companies listing in the US and provided a boost to the country's technology sector.
Whilst all "high-growth" companies will be able to benefit from the implementation of the proposals, it is the UK and European technology sectors that look set to benefit the most. Indeed, the terms "high-growth" and "high-tech" are largely analogous in this context: by the very nature of their markets, high-tech companies need to develop products, bring them to market and reinvest in new products at an incredible rate. Those companies that are successful can be transformed from high-tech minnows to global enterprises within a short timeframe. However, the difficulty in accessing finance seen at present in the UK is proving to be an obstacle for otherwise promising businesses.
The precise level of deregulation that the Government and LSE are considering has not been fully disclosed. It is envisaged that high-growth companies will be relieved of the obligation to place 25% of their shares in public hands, with a lower threshold likely to be set. In addition, some of the current reporting requirements and other continuing obligations of listed companies will be relaxed for high-growth companies. Further Government consultations are set to take place this month, and a report will follow.