There is a choice of three principal UK stock markets. The London Stock Exchange Official List or main market; the Alternative Investment Market (AIM), which is also run by the LSE; and PLUS Markets, a junior exchange run separately.
This is the most demanding UK market in terms of requirements and regulations. Companies have to have a minimum of 25% of their shares in public hands; a trading record of at least three years; and must comply with the rules of the UK Listing Authority (UKLA). Shareholder approval may also be needed for certain transactions. Today, the main market has around 1,800 companies with a total market capitalisation of more than £3,500bn. Investment banker Clara Furse is the first female chief executive of the London Stock Exchange.
Launched in the mid-1990s, AIM is specifically designed to appeal to smaller companies that might not have the track record of those on the main market. It also has a more flexible regulatory environment. As such, it does not require any minimum percentage of shares to be in public hands; companies do not need a trading record; and admission documents are not looked at by the Stock Exchange or the UK Listing Authority. Investors in AIM companies can qualify for a range of tax reliefs, such as the Enterprise Investment Scheme and Venture Capital Trusts, because the Inland Revenue treats the companies as if they were unquoted. Companies seeking to be admitted to trade on AIM have to appoint a Nominated Adviser, which acts to reassure the authorities that the regulatory requirements have been met, and a broker.
Many companies use PLUS as a training ground before moving up to AIM or the LSE's Main Market. It is managed and run by PLUS Markets Group plc. The requirements for application to PLUS and the continuing obligations of its companies are not as stringent as those on the other markets. For example, companies have to abide by the PLUS Rule Book rather than, say, the Listing Rules of the UKLA. That said, companies are still required to disclose price-sensitive information in a timely manner and follow many of the other rules expected of public companies on the more highly regulated markets.
To help you on your business journey, we've created Smarta Business Builder, the complete online tools package for growing your business. Website Builder, Business Plans, Accounting Software, Legal Documents and Email - all in one place - from just £20 per month with no contract! Try it out today.