AQSE consults on changes to admission rules

As regulators and rule-makers consider sweeping changes to the LSE Main Market prompted by the Hill Review, AQSE has also been reflecting on amendments to its regimes (some of which are also in response to HM Treasury's declared intentions for UK public markets). On 22 August 2022, AQSE published its consultation paper asking for views on the proposed adjustment of the admission rules for both its Access and Apex listing segments. Its proposals include simplifications to the admission document, the removal of the need to publish a growth prospectus on the Apex segment, and revised eligibility criteria for admission to the Access segment.

AQSE admission rules

Aiming to increase the efficiency of IPO processes without compromising integrity and standards, AQSE is proposing to simplify its admission document. A new template "Additional Information" section would be attached to the document, rather than requiring companies to publish the existing "Additional Information" chapter. The stated aim is to improve investors' access to key investment information in a consistent manner. This simplification would not be available to issuers with complex corporate structures or unique shareholder rights.

Requirement for a growth prospectus on Apex

In its UK Prospectus Regime Review (see our ECM Hub Insight published on 1 March 2022),  the HM Treasury announced an intention to add securities admitted to trading on venues such as the AQSE Growth Market to the list of exemptions against public offerings (which might otherwise require the preparation of a prospectus to access retail investors, etc). It also intends to treat an admission document published in accordance with the rules of trading venues like AQSE as a prospectus. Since issuers would therefore be able to publish an AQSE admission document following these changes, AQSE proposes to remove its own requirement (in place since 2020) for an issuer to publish a growth prospectus on admission to the Apex segment, which currently must be prepared in accordance with the Prospectus Regulation and approved by the FCA.

Eligibility criteria for the Access segment

In order that issuers comply with principles of good governance and are suitable for a public listing, AQSE would like to make certain amendments to its eligibility criteria for issuers joining the Access segment:

• Governance – issuers would be required to adopt the QCA or UK Governance Code as far as possible. AQSE Apex Rule 4.14 would subsequently be amended to require issuers to publish a statement of compliance with such governance principles on their website (including reasons for any deviations or non-compliance);
• Minimum market cap – the minimum market capitalisation for admission of a new issuer is to be raised to £2 million. AQSE is concerned that companies with a smaller market capitalisation are not suitable for the public markets, nor do they typically have a large enough investor base to meet the demands of being a public company;
• Minimum number of market makers – the minimum number of market makers required to be registered on admission is to be increased to two, the raising of the standard said to reflect developments in the segment on market maker engagement and the resulting improved liquidity; and
• Speculative bonds – noting the investigative work carried out by the FCA to ban the promotion of speculative mini-bonds to retail consumers, AQSE proposes clarifying that such "speculative securities" are not eligible for listing.

AQSE has also taken the opportunity provided by the Consultation to undertake a more general review of its relevant rules, appending a mark-up of them to its Consultation.

AQSE has requested responses to its Consultation by 2 September 2022.