On 19 October 2016, Hotel Chocolat Group plc, a British chocolatier and cocoa grower, announced a year of significant progress in its preliminary results for the period ended 26 June 2016, with revenue up by 12% and profit before tax increased by 91%.

Some of this success may be attributed to its decision to admit its ordinary shares to trading on the Alternative Investment Market (AIM) of the London Stock Exchange back in May.

Oftentimes, companies are dissuaded from 'going public' by the associated regulatory, procedural and administrative burdens. Of note, a public company must:

  • have a minimum allotted share capital of £50,000 (or euro equivalent), with a quarter (plus any premium) being paid up;
  • comply with legal restrictions and limitations in relation to the types of shares that can be allotted, how they can be allotted, how they should be paid for, etc.;
  • hold an annual general meeting;
  • appoint auditors annually;
  • lay accounts before the general meeting;
  • appoint at least two directors and one suitably qualified company secretary;
  • fulfil onerous filing requirements;
  • comply with the provisions of the Takeover Code, etc.

However, the opportunity to raise equity capital by offering shares to the public on a recognised stock exchange has, in this case, seemingly outweighed the disadvantages. The price of shares in the company on the London Stock Exchange reached £2.75 on 20 October, having risen from £1.90 on 10 May.

Going public not only facilitates an influx of outside investment and provides existing shareholders with the freedom to trade their shares more freely and easily, but also has the potential to increase brand exposure and awareness.

If you would like any further information on the legal challenges faced by companies converting from private to public, or from public to private, please get in touch with a member of the Bryan Cave Retail Team.