UK Law and Practice Contributed by: Dylan Doran Kennett, Michael Jacobs, Stephen Newby and Mark Ife, Herbert Smith Freehills LLP
The government predicts that PISCES will “sup- port the pipeline for future IPOs in the UK, by improving the interface between private compa- nies and UK public markets” . Intended to provide greater protection and regulation than offered by the current private secondary trading market but remaining a lighter-touch approach than public regulated markets, PISCES will bridge the gap between the two with a standardised and con - trolled private trading environment. In December 2024, the FCA published CP24/29, setting out its proposal on how PISCES might work in practice. The FCA is taking “private- plus” (as opposed to “public-minus” ) approach to its PISCES rules, proposing a bespoke regime that builds on private market practices on “buyer beware” basis, rather than using public market standards as a starting point. The key legal and regulatory parameters of the draft legislation include: • shares being traded intermittently during “trading windows” ; • restrictions on the categories of investors that can trade on PISCES; • the stamp duty/SDRT position mirroring the Alternative Investment Market (AIM) and so stamp duty will not apply, as well as shares traded on PISCES benefitting from business property relief (see 4.2 Tax Treatment ); • disclosure requirements to investors who may trade in a specific window but not to the pub - lic – there is also an overarching requirement on the PISCES operator to maintain appropri - ate disclosure arrangements for the proper functioning of its market, and the criminal market manipulation regime will apply; and • a market abuse regime (which is not a pub - lic market-style) tailored to the intermittent nature of trading and the specific risks posed.
HM Treasury published a draft statutory instru - ment (SI) and accompanying policy note setting out the PISCES framework in November 2024, and aims to introduce the PISCES legislation by May 2025. On 17 December 2024, the FCA pub - lished a consultation on its proposed rules for PISCES. The consultation closed on 17 February 2025 and it expects to publish the final rules by May 2025, before opening the PISCES Sandbox for applications. A venture capital-backed IPO is the initial offer - ing of shares of a company that has been mainly funded by venture capital investors. For an IPO in the UK, an offering of shares to the public requires the publication of an FCA-approved prospectus. The UK Prospectus Regulation and Financial Services and Markets Act provides that a prospectus must contain the necessary infor - mation that is material to an investor for making an informed assessment of: 7. Regulation 7.1 Securities Offerings • the assets and liabilities, profits and losses, financial position and prospects of the com - pany; • the rights attaching to the shares; and • the reasons for the issuance and its impact on the company. When preparing the prospectus, it is important to consider the following. The “Equity Story” The equity story is fundamental in highlighting the strengths of the company, its potential for growth and any key risks associated with the business. It includes the description of the busi - ness model, its market environment and growth
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