London Stock Exchange: Main Market

The Main Market is the London Stock Exchange’s market aimed at larger, more established companies and is one of the biggest stock markets in the world. Your company must fulfil certain requirements to join, but you can then benefit from an increased profile and visibility, as well as access to capital for growth and development.

This guide explains how the Main Market works – including the benefits and considerations of being listed, along with the eligibility requirements and continuing obligations of joining the market. The guide also explains the roles of the various advisers a company must appoint.

This guide is for information purposes only. It is not professional, financial or investment advice and must not be used as a basis for making investment decisions.

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What is the London Stock Exchange Main Market?

The Main Market is one of the equity markets of the London Stock Exchange – and one of the largest stock markets in the world. It is usually reserved for larger, more established companies as it has exacting requirements that you must fulfil in order to join.

The Main Market is not suitable for all companies. Instead, some smaller, growing companies can choose to join AIM – another market operated by the London Stock Exchange. For more information, see our guide on the London Stock Exchange: AIM.

How the Main Market operates

Joining a public market – eg the Main Market or AIM – can help you grow and enhance your business by creating more capital to expand or to develop the services or products you offer.

However, before you decide to float on the stock market, you should have your business independently valued, and decide what percentage of your business – through issuing shares equal to that value – you are willing to make available for sale on the stock market.

The London Stock Exchange Main Market works by offering a unit – or units – of your business to potential investors – usually in the form of ‘securities’. There are a number of securities you can list on the Main Market, including:

• shares – including UK Real Estate Investment Trusts
• depository receipts
• debt securities
• investment entities

In order to join the Main Market, there are certain requirements you must fulfil. For more information, see the page in this guide on how to list your business on the London Stock Exchange Main Market.

Main Market – the regulatory framework

To join the Main Market your business must meet the requirements set out in the London Stock Exchange’s Admission and Disclosure Standards. These standards set out what a company must do in order to be eligible for the Main Market. For more information, download the Admission and Disclosure Standards from the London Stock Exchange website (PDF, 1.11MB)- Opens in a new window.

When you apply to join the Main Market, you can choose which type of listing you want to have – Premium or Standard. The Standard Listing requires compliance with European Union minimum standards, while a Premium Listing requires compliance with an additional body of rules that are ‘super-equivalent’, or additional to the European minimum requirements. These additional requirements include substantive eligibility requirements such as the need for a three-year track record and the requirement for a sponsor in relation to a Premium Listing. The listing type you choose will also determine the eligibility criteria, prospectus contents and continuing obligations which apply to the issuer, as well as the securities it issues.

In the Financial Services Authority (FSA) Handbook there are three sections that outline the relevant rules for companies joining the Main Market:

• Listing Rules – include eligibility for admission and requirements which apply once on market
• Prospectus Rules – detail the occasions when a prospectus is required and the necessary contents
• Disclosure and Transparency Rules – govern the periodic and event driven disclosure of information by Main Market companies

You can read the FSA Handbook on the FSA website- Opens in a new window.

While floating on the London Stock Exchange Main Market can present a number of advantages, there are also things that you should consider as joining the Main Market may not be right for your business. For more information, see the page in this guide on the benefits and considerations of joining the London Stock Exchange Main Market.

How shares are traded on the Main Market

When a company’s shares are admitted to the Main Market, they are traded on the London Stock Exchange trading platform. The trading platform is designed to maximise liquidity in the stocks traded on them, by bringing together a high number of potential investors (both buyers and sellers) with quick, efficient share transactions. In order to attract a wide range of investors, you should be committed to, and follow, the high standards of corporate governance required of companies listed on the Main Market.

For more information, you can download guidance about trading services from the London Stock Exchange website (PDF, 978K)- Opens in a new window.

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Is the London Stock Exchange Main Market right for your business?

Floating on a public market is an important decision for your business. It can provide you with access to increased capital for growth and development, and can lead to investment opportunities. A listing on the London Stock Exchange Main Market also gives your business access to a wide investor base and one of the world’s most liquid trading facilities.

However, the LSE Main Market is not appropriate for all businesses – it is typically reserved for larger, more established businesses. As such, you should fully consider whether your business is ready to join. For example, investors will only buy shares in your business if it is an attractive investment proposition with strong potential for growth so you need to make sure you are ‘investment ready’. For advice on preparing for a stock market flotation, see our guides on floating on the stock market and how to secure equity investment.

The London Stock Exchange also operates AIM. This market is designed for smaller, growing companies – so may be a more suitable option for your business. For more information, see our guide on the London Stock Exchange: AIM.

Once you have decided to apply for a listing on the Main Market, you need to decide on the most appropriate type of listing – Premium or Standard. Many UK businesses choose a Premium Listing which requires compliance with an additional body of rules that are ‘super-equivalent’, or additional to the European minimum requirements. These additional requirements include substantive eligibility requirements such as the need for a three-year track record and the requirement for a sponsor in relation to a Premium Listing. There is now also a Standard Listing option, in line with European minimum standards.

Download guidance on the differences between Premium and Standard Listing from the London Stock Exchange website (PDF, 7.13MB) – Opens in a new window.

To join the Main Market, you must work with your advisers to produce a prospectus which must be approved by the UK Listing Authority (UKLA). The UKLA is a division of the Financial Services Authority and is responsible for assessing and approving a company’s eligibility for admission to the Official List.

There are specific eligibility criteria that your company must meet before it can be admitted to the Official List and then admitted to trading on the Main Market. These requirements differ depending on whether you join the market through a Premium or Standard Listing.

You must also appoint certain professional advisers, who will be able to explain the eligibility requirements in more detail.

For more information, see the page in this guide on the eligibility requirements when joining the London Stock Exchange Main Market.

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The benefits and considerations of joining the London Stock Exchange Main Market

Before you join the London Stock Exchange Main Market, you should consider the potential advantages, but you should also bear in mind the challenges your company will face.

Such a decision brings responsibilities as well as benefits. People at every level of your business – from board members to employees – must be ready to accept the disciplines inherent in having shares traded publicly.

Benefits of joining the Main Market

Joining the Main Market can bring a range of benefits to your company, including:

• access to capital which could help your company raise finance for further development, both at the time of admission and through further capital raisings
• an increased profile which can increase demand for your shares and improve your company’s liquidity – some investors are more comfortable investing in a business listed on the Main Market as they may see it as being a more secure opportunity
• facilitation of acquisitions – increasing your company’s ability to make acquisitions, using listed shares as currency
• objective valuation – placing an independent value on your company’s business
• creating a market for your company’s shares – helping to broaden your shareholder base
• improving employee commitment – you can use shares as an employee incentive to encourage their long-term motivation

Matters to consider

However, you should also carefully consider the potential issues involved in joining the Main Market, for example:

• Listing costs – the expense of joining a public market can be considerable, both at the time of admission and in ongoing costs. You will need to pay for the services of a range of advisers – including a reporting accountant, lawyer, investor relations and public relations.
• Market fluctuations – these can be caused by a range of external factors, including social, political and economic change, all of which can affect your company’s share price – both positively and negatively.
• Compliance – as a publicly listed company you will need to comply (or explain why you do not comply) with the UK code on Corporate Governance.

You should carefully evaluate both the benefits and potential issues before joining the Main Market. For detailed advice, download guidance on being listed on the London Stock Exchange from the London Stock Exchange website (PDF, 7.13MB) – Opens in a new window.

Alternative sources of finance

If being listed on a stock market is not right for your company, you could consider other ways to raise finance. For example:

• private equity – either through a firm or individual such as a venture capitalist or business angel
• debt finance
• management or employee buy out

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Eligibility requirements when joining the London Stock Exchange Main Market

There are specific eligibility criteria that your company must meet before it can become listed on the London Stock Exchange Main Market. For advice on the eligibility requirements and the continuing obligations, download London Stock Exchange listing guidance from the London Stock Exchange website (PDF, 7.13MB) – Opens in a new window.

You will need to appoint a range of advisers, including:

• a lawyer
• an auditor
• an investor relations adviser
• public relations
• a sponsor – depending on your chosen route to market

These advisers will help you prepare the necessary documentation, guide you through the application and admission process, and assist with legal and financial issues. For more information, see the page in this guide how to list your business on the London Stock Exchange Main Market.

If you intend to join the Main Market through the Premium Listing route, you must appoint a UK Listing Authority (UKLA) approved sponsor.

If you choose the Standard Listing, a corporate adviser can be appointed – this isn’t a legal requirement, but a corporate adviser can help you through much of the listing process and provide valuable expertise. For more information on advisers, download London Stock Exchange listing guidance from the London Stock Exchange website (PDF, 7.13MB) – Opens in a new window.

Sponsors and corporate advisers are usually investment banks, corporate finance houses, stockbrokers or accountancy companies. They will play a key role in your company’s flotation process – providing advice throughout the admission process and liaising with the London Stock Exchange and the UKLA on your behalf.

Main Market listing requirements

Your advisers will be able to explain UKLA’s listing requirements to you. These are the requirements that you must meet in order to be eligible for listing on the Main Market. There are other exceptions that may apply to your business that your adviser will also discuss with you.

Some of the main requirements that you must comply with are:

• Incorporation – your business must be incorporated or established within any specific laws for the area of work it undertakes.
• Accounts – you must have audited accounts, published or filed, for a three-year period. The end of this period must be no more than six months before the planned flotation.
• Track record – you must be able to show trading records for a specific amount of time and be able to show that you have working capital for this period.
• Market capitalisation – you must meet the minimum market capitalisation of £700,000 for equity and £200,000 for debt.
• Shares in public hands – 25 per cent of your shares must be held by the public.

Many of the UKLA listing requirements reflect the information that potential investors would be looking for in a business. For example, it is likely that any investor would want previous evidence of your company’s track record before investing. By making this information public before flotation, it makes it easier for investors to find information on your company and can increase the likelihood of early investment.

Read the UKLA listing rules on the Financial Services Authority (FSA) website – Opens in a new window.

Reporting requirements and continuing obligations

In addition to meeting the necessary application and eligibility criteria, companies listed on the London Stock Exchange Main Market must also meet the UKLA’s continuing obligations. You must comply with the following key obligations:

• Disclosure of inside information – a company is required to publish ‘inside information’ that directly concerns it as soon as possible, through a Regulatory Information Service. ‘Inside information’ is information that, if made public, would be likely to have a significant effect on the price of the shares or related financial instruments.
• Financial reporting – a company must publish annual and semi-annual financial reports, including consolidated financial information for the relevant period, together with an accompanying review of the company’s business for that period.
• Major shareholder interests – any shareholder who acquires three per cent or more of the company’s voting share capital must disclose this information – to the company and the market.
• Transactions – Premium Listed companies must obtain shareholder approval before undertaking an acquisition or disposal. This is necessary for all substantial transactions and smaller transactions may have to be notified to the market.
• Director dealings in shares – all directors who deal in a company’s shares must disclose this information to the business and notify the market.

You can read information on the UK listing rules and continuing obligations on the FSA website – Opens in a new window.

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How to list your business on the London Stock Exchange Main Market

There are several steps you need to consider when listing your business on the London Stock Exchange Main Market.

Appointing advisers

In order to join the London Stock Exchange Main Market, you must have certain advisers in place. You may already have advisers who have the relevant public market experience, or you may need to seek recommendations to appoint new ones.

Each adviser plays a vital role in the application and admission process for the Main Market:

• A sponsor or corporate adviser. For a Premium Listing on the Main Market, you must appoint and use a sponsor to guide your company through the application and admission process, and to advise on the UK Listing Authority’s (UKLA’s) legal requirements. For companies on a Standard Listing, a corporate adviser may be appointed instead. Sponsors and corporate advisers are usually investment banks, corporate finance houses, stockbrokers or accountancy companies.
• A broker. A broker will assist with the pricing of your shares and help generate interest in your business by marketing it when your company is admitted to trading and thereafter.
• A reporting accountant. Your accountant will independently review your company’s financial position and produce a number of reports to meet specific regulatory requirements and to assist the directors or the sponsor in meeting their obligations.
• A lawyer. Your lawyer will be able to advise you on any legal issues that might arise as a result of your admission to the Main Market, including the necessary disclosure requirements and continuing obligations.

Preparing your company for the Main Market

You should review the following aspects of your company before beginning the listing process:

• Assets and liabilities – you must ensure that your company owns or controls all of the assets needed for the operation of your company and that you can cover any liabilities
• Shareholder arrangements – you should ensure that any current shareholders agree a time-limit restriction on selling their shares after flotation
• Share capital – you will need to organise how to split your new share capital, or re-organise the current capital you have
• Contracts – formalise any important contracts – eg for personnel, suppliers, sub-contractors, etc
• Intellectual property (IP) – ensure that any valuable IP is protected before flotation
• Insurance – ensure that all insurance policies are up to date and provide adequate cover

Your adviser will be able to provide guidance around many of these points.

Joining the Main Market

The length of time it will take to join the Main Market will depend on a number of factors, including your chosen route to market and on your company’s fundraising requirements. Once you have appointed your advisers you should be able to agree a realistic timescale for joining the Main Market. Usually, the preparations and process for joining take between four and six months, but they can take considerably longer. Once you have appointed your advisers, you must also:

• Create your prospectus – you must produce a prospectus which will be verified by the UKLA. This will also be your main marketing document and should contain enough information for investors to decide whether your business is a viable investment opportunity – eg information on the structure and financial position of your business, including profits, losses and future goals. It must also comply with strict provisions set out by the Financial Services Authority. In some instances, you may be able to use ‘passporting’ to gain admission to the Main Market from another European Union member state. Find information on passporting to the Main Market on the London Stock Exchange website – Opens in a new window.
• Apply for admission to trade – you must apply to both London Stock Exchange and the UKLA to admit your securities to the Main Market. The applications will run simultaneously and you must meet all the requirements of both organisations.
• Market your flotation – you should promote your flotation amongst potential investors to ensure success on admission day. Your broker will help with this.
• Complete the underwriting agreement – you should enter into a placing or underwriting agreement between relevant parties such as brokers, directors and selling shareholders.
• Hold an impact day – the impact day is when the prospectus is approved and published, and flotation is announced.

Once you have successfully completed these tasks, your company’s shares will be admitted to trading on the Main Market, and trading can commence.

Download guidance on Admission and Disclosure Standards from the London Stock Exchange website (PDF, 1.63MB) – Opens in a new window.

When you apply for listing to the Main Market, you can choose a Standard or Premium Listing – each of which has different listing requirements. For more information, see the page in this guide on what is the London Stock Exchange Main Market? 

You can also read Main Market listing regime information on the London Stock Exchange website – Opens in a new window. 

Download guidance on Admission and Disclosure Standards from the London Stock Exchange website (PDF, 1.63MB) – Opens in a new window.

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