Introduction
There has been considerable debate over the last few years in the London investment community about making the UK the best place for companies to start, grow, scale and stay and the UK providing a home for companies looking to raise capital. Much has been made of the freedom the UK has following Brexit to make its own rules relating to investment exchanges and the raising of capital. A notable result of this debate and new freedom was the reform in July 2024 of the Main Market in London and the introduction of the new UK Listing Rules.
As part of this continuing drive to reform the regulatory regime for quoted companies or companies considering an IPO, the London Stock Exchange (Exchange) published a feedback statement (Feedback Statement) in November 2025 in response to earlier consultation. The Feedback Statement set out the Exchange’s view on the future of AIM and confirmed that there will be consultation in the first half of 2026 about the detailed changes to the AIM Rules. On that basis we presume that the changes to the AIM Rules will not come into force until Q4 of 2026 (at the earliest).
In addition, on 19 January 2026 the Public Offers and Admissions to Trading Regulations 2024 (POATRs) came into force, and replaced the UK Prospectus Regulation. The POATRs now set out the guidelines for when a company is required to produce a prospectus. For companies whose shares are traded on AIM — which is classified as a multilateral trading facility (MTF) for the purposes of the POATRs — the position is slightly different. An “MTF admission prospectus” is required both to comply with the AIM Rules and to contain the necessary information which is material to an investor for making an informed assessment of: the company’s assets and liabilities, profits and losses, financial position and prospects (and of any guarantor); the rights attaching to the securities for which admission is sought; and the reasons for the issue of shares (if applicable) and its impact on the company.
It is therefore the perfect time to take a step back and consider what changes have been made to the regulatory system and the extent to which those changes will have a material effect on quoted companies or companies considering an IPO.
For the reasons set out in this article, in our view the changes introduced by the POATRs will immediately simplify the preparation of a prospectus, enhance its usefulness to investors, and benefit companies that are already fully listed. We are also in favour of the proposed changes to the AIM Rules and the changes that have already been implemented by the POATRs, but do consider that the changes could be implemented more quickly than is currently contemplated. In summary, we consider that the changes to the regulatory landscape should make the UK markets more attractive than was previously the case, although we do consider that the changes to AIM could be implemented more quickly.
POATRs
The POATRs replace the UK Prospectus Regulation cover two separate, but related, topics i.e.: (1) public offers and when a prospectus is required; and (2) admissions to trading on the Main Market or on an MTF. For the most part, the public offers element of the POATRs results in a very similar position as was the case before 19 January under the UK Prospectus Regulation. However, there are some important, and potentially very useful differences. The FCA has issued four new technical notes and has amended several existing technical notes and procedural notes as a result of the introduction of the POATRs.
Exemptions to the prospectus requirement
A prospectus is still required if there is an “offer to the public” (which is very widely defined). The exemptions to this requirement are similar to those under the previous rules. The exemptions that are most likely to be of use are that no prospectus is required where: the offer is addressed solely to qualified investors (in essence a professional investor); the offer is addressed to fewer than 150 natural or legal persons in the UK, other than qualified investors; the offer of securities is addressed to investors who acquire securities for a total consideration of at least £50,000 (or the equivalent) per investor, for each separate offer; or the total consideration for the transferable securities being offered in the UK cannot exceed £5 million (or the equivalent) – it is necessary to aggregate offers open at any time within the previous 12 months that relied on this exemption. The last exemption (i.e. the £5 million maximum fundraise in a 12-month period) is the exemption that has changed most. Under the previous rules, that figure was €8 million (so a bigger fundraise used to be allowed before a prospectus requirement was triggered).
Threshold for listed companies to issue shares without triggering a prospectus requirement
Probably the biggest change is to the rule requiring a company that is already listed on the Main Market to issue a prospectus if it issues shares over a 12-month period that, in aggregate, exceed a specified percentage of the number of shares that are listed (i.e. the issued share capital of the company). Under the previous regime, that percentage was 20%. However, under the POATRs, a Main Market company is not required to issue a prospectus until the number of shares it has issued over the previous 12 months exceeds 75% of the number of shares in that company. For smaller but active Main Market companies, the 20% threshold meant that the prospectus requirement could be triggered relatively often thus causing a delay and expense before a transaction could be completed. Increasing the threshold from 20% to 75% will mean that smaller Main Market companies will not have to go the expense of preparing a prospectus as often as was the case under the previous regime. Some of our clients have already found this particular change beneficial in terms of fundraising and other corporate opportunities where they may issue shares as consideration, for example.
Protected forward-looking statements
The new regime introduces protected forward-looking statements (PFLS) with a reduced liability standard, changing from a negligence standard to a recklessness standard for certain forward-looking information in prospectuses. For a forward-looking statement to qualify as PFLS, it must be clearly identified and accompanied by specific disclaimers explaining the different liability standard and the uncertainty inherent in such statements. This change should provide companies with greater confidence when including forward-looking statements in their prospectuses, potentially encouraging more comprehensive disclosure of business plans and projections. This should, in turn, encourage investors to invest in companies which make PFLS as investors will have enhanced information about that company. The FCA has provided guidance as to what does (and does not) constitute PFLS. In essence, the statement must relate to future events that can only be determined after publication and must include an estimate of when the relevant events are expected to occur. Working capital statements remain subject to the negligence standard and cannot be treated as PFLS.
Working capital statements
There is now much more flexibility than was previously the case as to the sort of working capital statement that is required in a prospectus in that it can be a “clean” or a “qualified” working capital statement, but if a company provides a qualified working capital statement then it must explain how it proposes to provide the additional working capital needed. The FCA will continue to consult about working capital statements.
Secondary issues
Companies can also benefit from a simplified disclosure regime for secondary issues, available to issuers whose shares have been admitted to trading continuously for at least 18 months. This regime allows for streamlined prospectuses when issuing additional securities, reducing the administrative burden and expense for established public companies.
Single listing application
The administrative burden of being a listed company has also been reduced. For example, a single listing application now covers all securities of a class that have been issued and may be issued in the future, meaning further issuances of securities in an already-listed class become automatically listed when issued without requiring separate listing applications. This change eliminates the previous block listing system and removes the requirement for issuers to retain documents for six years after admission to listing.
AIM
The Feedback Statement gives a holistic view of AIM. It considers external factors critical to AIM’s future success; the Exchange’s engagement with Government on tax incentives; the positioning of AIM and the nominated adviser model (nomad); some proposed rule changes and the Exchange’s approach to requests for derogation from the AIM Rules until the changes come into effect; and some thoughts about the future “direction of travel”.
External factors
We agree with what the Exchange has said, both about external factors and tax incentives and about the changes it is proposing to make to the AIM Rules. For example, we imagine that the entire “AIM community” will agree the “Mansion House Compact” should be interpreted by its signatories as meaning that institutional investors should direct investment into AIM companies, as well as infrastructure and private companies. Similarly, we agree that: the recent government changes to Business Property Relief for AIM have created uncertainty and have damaged the attractiveness of AIM, the eligibility criteria for EIS/VCT should be broadened and simplified to enable the provision of more early-stage risk capital; and changes to the ISA framework to unlock greater retail investor participation in public growth markets, the suggested reduction of the allowance for cash ISAs could encourage a shift towards stocks and shares ISAs, which are eligible for investment in AIM.
We also note that the Feedback Statement highlights that, although the underlying financial reporting requirements for AIM companies may be intended to be proportionate and less onerous than for Main Market companies, over the years, in practice, the inclusion of AIM audits by the Financial Reporting Council (FRC) within the scope of its Audit Quality Review framework (AQR) (being those with a market capitalisation of over €200m) has resulted in the perception that inspection requirements for all AIM companies (not just those directly under the AQR framework) have moved to be aligned to those applying to Main Market companies. Therefore, like the Exchange, we support the FRC’s developing approach to implement a more proportionate approach to the auditing of SMEs, including AIM companies and welcome the FRC’s confirmation that they will be considering how they may support auditors to have the confidence to adopt a tailored approach in respect of AIM audits.
Changes to the governance of AIM and the AIM Rules
That said, we would urge the Exchange to focus on bringing in the changes more quickly than is currently contemplated and focus on what it can do directly to make AIM more attractive and to make life easier for both existing and prospective AIM companies. The Feedback Statement includes both more general comments about the AIM model and the nomad model as well as more specific comments about rule changes. We agree that it is important that investors understand the nature of the market and the companies it supports and recognise that AIM is a buyer beware market and that therefore investors must carefully consider whether the risk profile of the companies and the market model is within their investment risk appetite and take responsibility for their investment choices.
Changes to the nomad model
We also agree that the nomad role has often become too compliance orientated with nomads often providing the strictest interpretation of the AIM Rules rather than providing the best advice from a corporate finance perspective even where it may be within the scope of the Rules. We therefore support the Exchange’s stated intention of resetting the nomad role by engaging with firms on a new technical guide for nomads, which will reflect the recalibration of its oversight of nomad obligations with a view to empowering nomad firms to be a trusted adviser, and to re-prioritise value added, high-quality corporate finance advice rather than acting as an outsourced compliance function.
Prospective changes to the AIM Rules
The Feedback Statement sets out a number of instances where the AIM Rules can be interpreted in a new manner with immediate effect from the date of the Feedback Statement or where AIM Regulation will consider a request for a derogation from the AIM Rules (i.e. a confirmation that the AIM Rules will not apply in that particular case).
Some of the changes that have either already come into force or where the nomad can request a derogation and, which, in our view, are likely to have the biggest impact are:
• Pending the drafting of the AIM Rules, nomads may request AIM Regulation for approval that an acquisition does not result in a fundamental change of business, and therefore that the acquisition be treated as a substantial transaction (which would not require shareholder approval and a new application to AIM) and not a reverse takeover (which would require shareholder approval and a new application to AIM).
• Pending the drafting of the AIM Rules, nomads may request AIM Regulation for approval, where a transaction is a reverse takeover and both parties are publicly traded companies, that (noting the public information is available on both companies) alternative disclosure (which we would anticipate would be incorporating information by reference) be included in an admission document instead of the usual disclosure requirements.
• Pending the drafting of the AIM Rules, nomads may request AIM Regulation for approval that historical financial information (HFI) be incorporated by reference into an admission document provided that information is readily available to investors and will remain so on an ongoing basis.
• Pending the drafting of the AIM Rules, nomads may request AIM Regulation for approval that UK GAAP (FRS 102) be the accounting standard on which HFI be presented – for unquoted companies whose accounts are prepared by reference to UK GAPP, this change could significantly reduce the time and costs otherwise incurred to convert historical financial information into IFRS ahead of joining AIM.
• Already effective, dual class share structures (i.e. giving founders special rights and control in certain circumstances) meeting the current Main Market requirements (applying equivalency where appropriate) will be acceptable for prospective AIM companies, although there will be a requirement that there is sufficient disclosure in relation to such share structures – this change should encourage entrepreneurs to take their companies public.
Some of the changes that are proposed and, which, in our view, are likely to have the biggest impact are:
• changes to the AIM Designated Market route to ensure this route provides a genuine fast-track route to market for companies which have been traded on certain overseas markets for at least 18 months; and
• the proposed increase in the percentage threshold under the class tests for “significant transactions” from 10% to 25% – this would mean that fewer transactions would be deemed to be “significant transactions” and so the burden of complying with Rule 12 would reduce.
The evolving UK regulatory landscape — including the introduction of the POATRs and the anticipated reforms to the AIM Rules — presents new opportunities for companies exploring public markets.
If you would like to discuss how these regulatory changes may affect your IPO strategy, secondary fundraising, or AIM admission, our Corporate & Capital Markets team at Druces would be pleased to assist.
Please contact our team to explore how these developments could support your growth and capital-raising ambitions.
Author
Nigel Gordon
Partner – Corporate & Capital Markets
Druces LLP
