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The Quoted Companies Alliance (QCA) welcomes the recommendations contained in the recently released UK Secondary Capital Raising Review.

Speaking on behalf of small and mid-caps, we believe that these recommendations will enable smaller quoted companies to raise capital cheaply and more efficiently. We have long maintained that the cost, complexity and time associated with secondary offers has prevented many small and mid-caps from making more broadly-based equity offerings.

We commend not just the bold and far-reaching proposals that are contained in the recommendations, but also the inclusive and open manner in which Mr Austin has conducted the Review.  We engaged with Mr Austin regularly both during and after the consultation period and feel that many of our concerns have been considered and addressed.

In particular, the recommendations that small and mid-caps see as being especially positive for the market, include:

  • Increasing the ability of companies to raise smaller amounts of funds quickly and cheaply by increasing the standard level for dis-application of pre-emption rights to 20%, something that one commentator suggested Mr Austin should “dead bat”;

  • Making fundraising structures quicker and cheaper by reducing the offer period for rights issues and open offers from 10 business days to 7 business days and reducing the notice period for shareholder meetings to 7 clear days;

  • Involving retail investors in capital raisings by reducing prospectus requirements to encourage wider shareholder participation; and

  • Raising the priority of a “drive to digitisation” by establishing a Digitisation Taskforce to facilitate innovation, stewardship and improved market infrastructure.

We believe that these recommendations, as well as the others contained in the Review, will help to facilitate a healthier environment for companies seeking to raise additional capital in the UK. This will not only produce benefits for companies, but for investors, employees, and ultimately, the growth of the UK economy.

The work is, of course, not complete yet, and we look forward to working with the Government and regulators as they take the recommendations forward. More specifically, the establishment of the Digitisation Taskforce is a crucial next step, and we will be sure to focus our efforts on the digitisation process going forward.

Tim Ward, Chief Executive, the Quoted Companies Alliance said:

“Unnecessary cost and complexity has actively discouraged small and mid-sized quoted companies from raising sufficient capital to become global leaders. The bold and far-reaching proposals of this Review reflect the concerns expressed by the small and mid-cap community and will pave the way for a more vibrant and efficient capital raising ecosystem, to the benefit of market participants and the wider UK economy.

With the conclusion of this Review, it is important that there is alignment and a joined up approach with the other reviews to ensure that reforms support the progress made here to ensure our markets offer choice and are regulated proportionately.” 

– Ends –

Notes to the Editors:
The Chancellor of the Exchequer, Nadhim Zahawi, today (19 July 2022), announced the publication of the UK Secondary Capital Raising Review report. The Review, which was chaired by Freshfields’ lawyer, Mark Austin, focuses on the secondary capital raising process and contains a series of recommendations aimed at making it easier for public companies to raise money in the UK.

The Review follows on from the work conducted by Lord Jonathan Hill in 2020 and is part of a wider push by Government to make UK markets more attractive and increase the efficiency of raising capital. The recommendations will seek to unlock greater levels of investment and encourage companies to complete their fundraising in the UK rather than in the US, Asia or the EU.

Ruby Halabi
Communications Executive, The Quoted Companies Alliance
T: 020 7397 8140
About the Quoted Companies Alliance
The Quoted Companies Alliance brings small and mid-sized quoted companies together to build one voice to help create an environment where these businesses can grow and deliver sustainable long-term benefits for investors and wider society. 
We believe that our members have huge potential, but they need a public market environment conducive to growth to allow them to attain it. We enable this environment by influencing policy and regulation, informing our members through surveys, research and guides and creating interaction through workshops, webinars, networking events and exclusive meetings. 
Our members are quoted on the Main Market, AIM and AQUIS. Informed by our 7 Expert Groups, we campaign to ensure that regulation is proportionate and conducive to growth, whilst maintaining the necessary protections for investors.
Find out more here.  

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