Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates

UK Capital Markets Reform: Where Are We Now?

Skadden Publication / Capital Markets Alert

Danny Tricot Justin Lau Luke G. Evans

Executive Summary

  • What’s new: Over the past five years, the UK has undergone a comprehensive programme of regulatory modernisation of its capital markets framework. The most recent changes, namely the most significant reforms to AIM in over two decades and new rules designed to streamline the research process in UK IPOs, both took effect in summer 2026.
  • Why it matters: These reforms have enhanced the competitiveness and attractiveness of UK public markets by removing barriers to listing, simplifying secondary fundraisings and enabling UK-listed companies to engage in M&A more easily.
  • What to do next: Companies considering UK listings, AIM admissions or secondary fundraisings should consider how the reformed listing rules and streamlined IPO process may affect their capital markets strategy.

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Over the last five years, through a series of reforms encompassing fundamental changes to the listing regime and the prospectus framework, the UK has undergone a comprehensive programme of regulatory modernisation designed to enhance the competitiveness and attractiveness of its public markets.

In this briefing, we take stock of where UK public markets stand now, review the key milestones in the reform process to date and explore two important changes that took effect during summer 2026:

  1. The most significant reforms to AIM in over two decades.
  2. New rules designed to streamline the UK IPO process.

The reforms are not over yet, and we also note a few developments on the radar.

The Bigger Picture

Key aims of the reforms include:

  • Removing barriers to listing in the UK.
  • Enabling UK-listed companies to engage in M&A more easily.
  • Simplifying the process for secondary fundraisings.
  • Positioning UK equity markets to be more competitive with equity markets in other jurisdictions.

Early Returns on UK Capital Markets Reform

An encouraging picture is emerging for UK capital markets. Eleven companies joined the London Stock Exchange (LSE) Main Market in H1 2026, including three IPOs, two introductions and six transfers from AIM. Since the listing reforms took effect at the end of July 2024, 14 Main Market IPOs have completed, with a further 25 companies joining the Main Market by way of introduction or transfer from AIM. The impact of the public offers and admissions to trading (POAT) regime and changes to the Conduct of Business Sourcebook (COBS) Rules are likely to further improve this picture.

Appetite from financial sponsors is also increasing, with the Shawbrook and Beauty Tech IPOs in late 2025 both involving private equity exits, a signal that financial sponsors are once again treating London as a viable route to public markets. Secondary capital formation tells a similar story, with more than £1.3 billion raised in follow-on equity on the LSE in H1 2026. A trend of mid- and large-cap companies electing to move to the Main Market from AIM following the introduction of the new listing regime further indicates that the reformed regime has been well received.

The wider investment case for UK equities is also shifting. The valuation gap between the FTSE 100 and S&P 500 companies is shrinking when comparing like-for-like companies, and commentary is increasingly sceptical of the perceived size of the liquidity gap between Europe and the US, especially when assessing only shares available for public trading. The Pension Schemes Act 2026 is now in law in the UK and the government has specifically charged the Department for Work and Pensions with encouraging investment into the UK. The pension reform agenda in the UK has the potential to greatly increase the capital available to companies listed in the UK by incentivising superfunds and pushing for investment in domestic assets.

Looking Back

Early Steps (December 2021)

  • Following Lord Hill’s UK Listing Review, the Financial Conduct Authority (FCA) introduced a package of listing rule changes intended to increase London’s competitiveness with other major listing venues, particularly in the US, and to encourage more high-growth and technology businesses to pursue IPOs in London. The changes included:
    • A more permissive regime for dual class share structures. For the first time, this enabled companies with qualifying dual class share structures, such as founder-led companies, to be listed on what was then the “premium segment” of the Main Market and therefore become eligible for inclusion in market indices such as the FTSE 100 and FTSE 250.
    • Reducing the free float requirement from 25% to 10%. This signalled a more flexible approach in line with other markets and enabled founders and existing shareholders to retain larger stakes at IPO.
  • In March 2022, FTSE Russell published corresponding changes to its free float threshold for index eligibility.

Pre-Emption and Retail Participation (November 2022)

  • The Pre-Emption Group published an amended Statement of Principles (for details, see our December 2022 client alert) giving listed companies greater scope to raise capital quickly through non-pre-emptive structures while introducing additional safeguards and promoting wider shareholder participation. The amendments included:
    • Doubling of the disapplication threshold. The maximum authority that a company can seek for non-pre-emptive issues increased from 10% to 20% of issued share capital, split into 10% (for any purpose at the board’s discretion) plus a further 10% (limited to raising proceeds in connection with acquisitions).
    • Follow-on offers for retail and existing shareholders. A new framework allowed companies to make follow-on offers to retail investors and existing shareholders who were not allocated shares in a placing, by way of an additional disapplication authority of up to 4%.
    • Enhanced flexibility for capital-hungry companies. Growth companies and other capital-hungry businesses gained the ability to seek a pre-emption limit beyond the 20% limit and in excess of the 15-month time limit.
  • In February 2023, the Investment Association issued revised Share Capital Management Guidelines, supporting the updated approach.

Introduction of New UK Listing Rules (UKLRs) (July 2024)

The biggest overhaul of the listing regime in over 30 years came into force on 29 July 2024 (see our July 2024 client alert). Key changes included the following:

  • A single segment for commercial companies. The new Equity Shares (Commercial Companies) (ESCC) category marked an end to the former two-tier regime comprising premium and standard listing segments.
  • A new regime for significant transactions. The update replaced the shareholder approval regime for significant transactions with a disclosure regime and simplified the class tests.
  • A more flexible related party regime. Related party transactions meeting the 5% test now require only a sponsor fairness opinion and announcement (instead of needing a circular and shareholder approval).
  • Financial track record eligibility. The FCA removed its long-standing eligibility requirements for a three-year track record, historical financial statements and a “clean” or unqualified working capital statement.
  • A reduced role of sponsors post-listing. Post-IPO, the sponsor role is now confined to prospectus issuances, reverse takeovers, large related party transactions, transfers and FCA guidance requests.

Launch of PISCES (June 2025)

In June 2025, the UK launched the Private Intermittent Securities and Capital Exchange System (PISCES), representing a significant step in broadening the UK’s capital markets ecosystem and facilitating private company shares trading in the UK. PISCES allows private companies to trade their shares on an intermittent basis without the regulatory obligations of a full public listing. The first PISCES trades marked an important milestone (see our Q1 Public Markets Monitor for further commentary).

Overhaul of Prospectus Regime (January 2026)

The new UK POAT regime took effect on 19 January 2026 (see our January 2026 client alert). The key changes included:

  • Significant reduction of the need for a prospectus for secondary issues. The regime raised the threshold below which a prospectus is not required for secondary issuances from 20% to 75% of issued share capital (compared with the EU’s 30% for companies with securities listed for less than 18 months).
  • A new liability regime for protected forward-looking statements. The POAT regime introduced a higher recklessness/dishonesty standard (rather than negligence) for such statements — which must be clearly identified in the prospectus.
  • Greater potential for retail investment. The rules reduced the minimum period for a prospectus to be made public before admission from six to three working days, allowing a retail offer to run simultaneously with an institutional offering.
  • A new Public Offer Platform (POP) regime. The POAT regime introduced an exception to the prohibition on making an offer to the public, whereby issuers can make public offers of securities above £5 million to UK retail investors without an FCA-approved prospectus, provided an FCA-authorised POP operator facilitates the offer. The SpaceX IPO on 12 June 2026 marked the first use of this regime.

FTSE Russell Changes (June 2026)

Effective from the June 2026 index review, FTSE Russell lowered the minimum free float requirement for non-UK incorporated companies from 25% to 10%. This change brings the requirements for non-UK companies in line with those applicable to UK-incorporated companies and is expected to broaden the pool of international companies eligible for inclusion in FTSE indices.

Looking Forward

We explore below two important developments, both of which took effect on 5 August 2026.

Redefining AIM: The Biggest Change in Over Two Decades

For background and context of the AIM reforms, see our December 2025 client alert, and for an analysis of the proposals, see our Q2 2026 Public Markets Monitor.

AIM Rules for Companies

Key changes included:

  • Removal of working capital statements. The working capital statement has been replaced by a requirement for targeted disclosure covering the applicant’s material capital resources, material financial commitments, obligations and liabilities, and future fundraising needs over a 12-month period. This change will significantly reduce the complexity and cost of the financial workstream on an AIM IPO.
  • Expansion of accepted accounting standards. UK GAAP (FRS 102) is now a permitted accounting standard, reducing the lead time and costs associated with converting private company accounts to IFRS.
  • Incorporation by reference. Applicants can incorporate historical financial information by reference if readily available to investors. This is an initial step to reduce the cost and length of AIM admission documents, which will be part of a separate consultation (see below).
  • A “Capital Access Window.”  This new concept allows, on a case-by-case basis, a voluntary temporary suspension during equity fundraising to manage the process and encourage broader investor participation while reducing market volatility.
  • Flexibility for corporate governance disclosures. A disclosure-based approach, allowing companies greater freedom in how they report on governance matters, has replaced the comply or explain requirement under AIM Rule 26.
  • Changes to reverse takeover rules. A transaction that exceeds 100% in the class tests will no longer trigger a reverse takeover without there also being a fundamental change in the company’s business, board or voting control.
  • An increase in the substantial transaction threshold from 10% to 25%. This aligns the position for AIM companies with the rules on substantial transactions under the UKLRs.
  • Dual class share structures now permitted at admission. Again, this change aligns with the position under the UKLRs.

Alongside the changes to the AIM Rules for Companies, the LSE also published new AIM Rules for Nominated Advisers, which came into effect on the same date. Reform of AIM has been a long time coming, in particular given the more limited differentiation from the LSE’s Main Market after the reform of the listing regime. The reforms signal a move to simplify the process of joining AIM and to provide AIM companies with greater flexibility in structuring and executing transactions.

COBS Rule Changes: Streamlining the UK IPO Process

For background and a summary of the FCA’s changes to the COBS Rules on IPO investment research, see our April 2026 client alert. The two key changes are:

  • Removal of the seven-day waiting period. The previous requirement for a seven-day delay between publication of an FCA-approved prospectus or registration document and connected research has been removed. Companies can now publish both simultaneously.
  • Removal of equal information sharing requirements. Firms publishing connected IPO research no longer need to share the same information that they provide to connected research analysts with unconnected analysts.

Practical effect: These changes shorten the period between IPO launch and pricing, thereby reducing market risk for issuers, and bring the UK position closer to European jurisdictions that do not have an equivalent seven-day waiting period requirement. The FCA has acknowledged that the COBS Rules did not result in high-quality unconnected research being published on IPOs, as intended. The changes to the COBS Rules will also reduce compliance costs and burdens for issuers.

Areas Still Under Review

The FCA is considering feedback and welcomes further engagement on the following:

  • Whether to maintain a requirement for a registration document to be published before any connected research. Most of the feedback has indicated that the requirement is not beneficial and should be amended.
  • Whether the COBS 12 guidance on pre-mandate issuer/analyst interactions is useful. Feedback shows mixed results, though most respondents challenged the utility of the guidance. Points made in support of removing the prohibition on analysts interacting with issuers included that issuers often choose a firm based on whether the firms’ analysts have the necessary sector expertise to cover the issuer’s business and the fact that other equivalent international regimes are less onerous, meaning the UK is at a competitive disadvantage.

Still on the Radar

Changes for Closed-Ended Investment Funds

In June 2026, the FCA published a consultation on changes to UKLR 11 (the rules for closed-ended investment funds), including changes relating to conflicts of interest and related party provisions. The consultation closed on 14 August 2026 and the FCA is aiming to finalise rules before the end of 2026. A separate review of the types of investment entities that should be eligible to list is ongoing, with a timetable to be published later in 2026. See further details in our Q2 Public Markets Monitor.

Upcoming DTR Review

In April 2026, the FCA indicated that it will review the Disclosure Guidance and Transparency Rules (DTR). A consultation is expected in Q3 of 2026. No further details have been published, but this represents another piece of the regulatory landscape.

Further Work on Working Capital Statements in Prospectuses

Broad support emerged for flexibility under the FCA’s proposed guidelines permitting issuers to include “uncommitted” facilities in their working capital calculations in certain circumstances. However, following concerns over inconsistencies between the working capital and going concern disclosures, the FCA consulted on a revised set of working capital guidelines to permit reliance on uncommitted facilities with appropriate disclosure. The consultation closed on 15 June 2026.

AIM – Further Consultation on Admission Documents

Responding to feedback that AIM admission documents are currently too complex and resource-intensive and can act as a barrier for companies seeking to join AIM, the LSE plans to consult separately on the admission documents’ contents with a view to simplifying the admission process.

Senior knowledge strategy lawyer Beliz McKenzie contributed to this article.

This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.

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