London Stock Exchange Listing Rules

Becoming listed on the LSE is a complicated process. The London Stock Exchange listing rules that must be fulfilled before a company can 'go public' follow.

The process of floating a company and their ongoing regulation is controlled by the UKLA (UK Listing Authority) which is a part of the FSA. The UKLA's listing requirements include:

Directors must sign a listing agreement which commits the board to high standards of behaviour and reporting levels to shareholders.

The directors must prepare a prospectus (known as listing particulars) to potential investors.

At least 25% of the share capital must be in the hands of the public so that the shares can be actively traded and remain reasonably liquid.

The company should have at least three years of accounts.

The company needs a sponsor (bank, stockbroker or other professional adviser) to guide and advise and to reassure the UKLA that the company is of sufficient quality.

Once listed on the London Stock Exchange, the company and directors have continuing obligations, which include:

Giving the market any price sensitive information as quickly as possible.

To undertake to disclose information fully and accurately.

The directors must follow strict guidelines relating to the buying and selling of their own shares in the company.

Obviously, these aren�t the full London Stock Exchange listing rules � I don�t want to bore you!! But they do offer a guide as to what is required of companies hoping to list on the main market.

One of the attractions of the Alternative Investment Market, AIM, is that these requirements are significantly less onerous and therefore costly. This helps to attract younger and more rapidy growing companies to market.