FCA announces stripped back rules for capital markets

The FCA has announced stripped back rules to make it easier for companies to raise the money for growth and support the UK's capital markets. The changes will lower costs for companies and widen access to investment opportunities for consumers.  

In a suite of measures, the FCA has confirmed that companies which are already listed won’t need to publish lengthy prospectuses to issue more shares, in most cases.  

The length of time between a prospectus being issued and an initial public offering (IPO) is also being halved, helping companies list more quickly on the stock exchange.   

In addition, companies will be able to issue corporate bonds to retail investors more easily and a new public offer platform will help smaller growth companies raise cash to scale up.  

Prospectus reform 

Companies will not be required to publish a prospectus when raising further capital, except in limited circumstances. 

The threshold for when a prospectus is required for a listed company to raise more shares has increased to 75% of existing share capital, up from its current 20% level. This will reduce costs for UK companies seeking new funds by an estimated £40 million per year, unlocking more capital for growth and investment. 

IPOs that include the wider public can come to market three days after the publication of their prospectus, replacing the previous six-day window and removing barriers to retail access. 

Corporate bonds 

The FCA has set out a single disclosure standard for corporate bond prospectuses, covering both large and small bonds. This reduces costs for companies and will make it easier for corporate bonds to be issued in smaller, more investible sizes and support retail investment. 

Corporate bonds offer a valuable investment opportunity for retail investors and can provide later life income, helping people navigate their financial lives. 

Public offer platforms

The regulator has set up a new platform for public offers to make it easier for growth companies to get the investment they need and increase opportunities for investors. 

It will enable companies to make larger offers of shares or bonds without a lengthy prospectus, above £5 million. Offers will be made available to a broad investor base outside of public markets via an authorised firm. This will work similarly to crowdfunding platforms but for larger deals.  

Simon Walls, executive director of markets at the FCA, commented: “These bold shifts promote innovation, lower costs, and enable a broader investor base for growing businesses. They are the latest in a programme of reforms shifting the balance from pre-emptive checks to market disclosures. 

“Our capital markets are world leading. They’re our economic engine, and we want to keep them roaring in support of sustained growth and prosperity for the whole country.”