New directive could harm attractiveness of UK’s junior stock markets
THE Quoted Companies Alliance (QCA) is calling on the Government to reconsider proposals that it claims could “significantly” harm the attractiveness of the UK’s junior stock markets.
The group, which represents the country’s small and mid-cap quoted firms, has written to Chancellor Alistair Darling highlighting a lack of strategic co-ordination over a series of proposals including The Prospectus Directive, which would restrict the European Commission’s concessions for smaller companies raising public funds.
The QCA claims that if approved the directive would create a more onerous public fund-raising regime for AIM and PLUS-quoted companies than those on the official list.
It said that while the Commission had suggested that the concessions could be extended once the Market Abuse and Transparency Directives apply to exchange-regulated markets, that would take years to achieve by which time the damage would have been done.
The QCA is also concerned that under the Prospectus Directive admission for UK companies to the official list requires no sponsor and the Combined Code does not apply. Neither is shareholder approval needed for transactions such as takeover.
Other concerns include current tax reliefs are designed to enhance equity funding for smaller firms.
Equally neither AIM nor PLUS-quoted shares can be held in an ISA – a major impediment to liquidity in smaller company stocks according to the QCA.
Tim Ward, chief executive of the QCA, said: “Nobody has looked at these changes in the light of the overall function and operation of equity markets as a whole.
“We need to stop stumbling from one initiative to another without direction, without purpose, and without fully considering the effects of each initiative on the UK’s market structure.”
