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Plus Stock Market (UK)

Why be listed in the Plus Market?
There are many reasons why companies choose to come to a public market.  A PLUS quotation can involve:

  • the ability to raise equity finance to fund continued growth;
  • the ability of existing issuers to be able to raise further funds;
  • enhance your company’s profile, in particular with potential new customers who may become aware of your company for the first time;
  • provide the wider market with the confidence that your company has gone through a rigorous scrutiny process. The disclosure requirements imposed on a PLUS-quoted company show that it has appropriate systems and controls in place, has financial standing and has appropriate levels of management. This in turn could potentially allow your company to conduct business on more favourable terms with new partners or customers;
  • provide an independent valuation for your business, allowing traded companies to use shares as an acquisition currency. This can be used for buying both private and quoted companies. It can also facilitate exit strategies, for example, a trade sale can be accelerated by the independent valuation achieved by the constant two way pricing of traded stock;
  • help existing shareholders – whether they are family members, founders or venture capitalists – to realise the value of their investment by providing a trading facility in the company’s shares; and
  • support employee share schemes and share option schemes to incentivise, retain and motivate employees and to attract new employees. Having a visible and independent value for the company’s shares may stimulate employee participation and engender longterm commitment to the business. For small
    entrepreneurial and family businesses, this can be a significant part of the benefits package to help to attract and retain highly skilled and motivated directors and senior employees.

The PLUS-quoted market

The PLUS-quoted is the UK primary market that is dedicated to the needs of smaller, growing companies seeking access to equity finance and access to London’s vibrant and liquid capital markets. The entry criteria are clear, transparent and unequivocal. Investors in PLUS-quoted companies benefit from a range of tax advantages that are designed to encourage the growth of smaller companies.

PLUS Markets status as an Recognised Investment Exchange (RIE) ensures both institutional and retail investors can take part in such fund raisings, both at the IPO stage and when companies raise further capital to finance their growth.

PLUS-quoted is open to ambitious companies and funds from the UK or overseas, issuing equity, debt or depository receipts. Because of the structure of the market a full EU compliant prospectus is not required to be produced and the review and approval process carried out by the UK’s listing authority can be avoided . Therefore, PLUS-quoted provides a straightforward and cost effective solution for young companies seeking to raise capital or enhance the profile of their businesses on a market designed to provide maximum visibility in in the world’s premier financial centre and dip into the deep pool of capital that is a trademark of the City of London.

Features of the PLUS-quoted market

  • Raised profile and enhanced visibility for your business
  • Tax benefits for your investors to encourage investment and growth
  • Cost effective access to the public markets•Clear and straightforward admission process
  • Dedicated to the needs of smaller growing companies
  • Ability to raise funds from a deep capital pool of institutional and private investors
  • The benefits of liquidity and price formation on a trading platform appropriate for smaller companies

Benefits to PLUS-quoted companies

  • a higher profile amongst new investors and customers;
  • an opportunity for existing shareholders to realise value in their investments;
  • a mechanism to raise new equity cost-effectively;
  • an independent valuation of the business;
  • a basis for employees’ share schemes; and
  • a currency for future acquisitions.

Admission Criteria

Braxton can work with you to meet PLUS admission criteria, which include:

  • Appoint and retain a Corporate Adviser;
  • Demonstrate adequate working capital;
  • Demonstrate appropriate levels of corporate governance, which in practice means that a company should have at least one independent non-executive director;
  • Have published audited report and accounts no more than nine months prior to the date of admission to trading;
  • Impose no restrictions on the transferability of shares; and
  • Issue shares that are eligible for electronic settlement.

There are no requirements relating to minimum trading record, minimum free float, or minimum market capitalisation. In addition, PLUS-quoted companies are not required to produce circulars and seek shareholder approval for large transactions up to the point of a reverse takeover – in other words, the UKLA “class tests” do not apply.

PLUS-listed companies

PLUS-listed is an international market open to issuers from all the world. In accordance with the EU directive requirements for securities admitted to a European regulated market, issuers are required to produce a prospectus, which has been approved by an appropriate authority within the EU. This provides a company with its passport into Europe via a London listing. UK primary listed companies are admitted to the Official List of the Financial Services Authority (FSA).

PLUS-listed provides the visibility on the most public of platforms to help a business raise its profile in London and Europe. It also provides unfettered access to the institutional investment that is the lifeblood of London’s capital markets. In addition to being an EU regulated market operated by a Recognised Investment Exchange, PLUS-listed qualifies as a Recognised Stock Exchange as defined in UK tax law , allowing tax efficient vehicles such as REITs to list in compliance with their particular requirements. The framework of the PLUS market provides the regulatory comfort that an issuer’s largest investors will demand.

Features of the PLUS-listed business

  • Access to the wealth of institutional capital available in London
  • Entry to the Official List
  • Securities on the PLUS-listed market will benefit from ISA and PEP eligibility
  • An EU Regulated Market and a Recognised Stock Exchange
  • The flagship primary market for established companies and the largest funds
  • Entry via an EU approved prospectus providing acess to investors across Europe
  • The PLUS-listed market offers an HMRC-approved listing venue for tax privileged issuers such as Investment Trusts, VCTs and REIT

Summary of the PLUS benefits

  • An international stock exchange based in London, United Kingdom
  • Authorised and regulated as a stock exchange by the FSA
  • Full stock coverage including the FTSE All-share and FTSEurofirst
  • Recognised Investment Exchange: authorised and regulated as a stock exchange with a choice of markets for fully listed or growth companies
  • World class trading platform
  • Wide range of instruments admitted, including International equity, Loan notes, GDRs and Innovative products such as CVR notes
  • Free trading membership for EU authorised investment firms
  • Easy access in accordance with EU directive passporting arrangements
  • Competitive tariff structure that rewards liquidity providersFull stock coverage including thousands of national and international securities
  • PLUS Markets data is distributed by all of the leading data vendors
  • Flexible and competitive tariffs for buy and sell side users
  • Global reach and penetration for companies and funds

PLUS business and Taxes

A brief guide to the tax treatments for the applicable markets on PLUS is as follows:

  • The PLUS-listed market is approved by HMRC, the UK tax authority, as a listing venue for tax-efficient issuers such as investment trusts, VCTs and REITs. Other tax advantage is that securities on the PLUS-listed market benefit from ISA and PEP eligibility.
  • The PLUS-quoted market investors benefit from important tax benefits for both individuals and corporates, including capital gains and inheritance tax reliefs; and eligibility for reliefs for venture capital trust and enterprise investment scheme investors.
  • Both PLUS-listed and PLUS-quoted securities are eligible for inclusion in self invested personal pension schemes (SIPPs).

Anyone in any doubt about their tax position should immediately consult their own independent financial adviser.

The Admission Process

The admission process for companies wishing to join the PLUS-quoted market is more flexible than other markets. However, a company will need to satisfy PLUS requirements. Braxton can help to meet such requirements, which include:

  • appoint and retain at all times a PLUS Corporate Adviser. Although there is no requirement to retain a broker, those companies committed to investor
    relations and likely to use the market for further fund-raisings, are encouraged to do so;
  • have published audited reports and accounts no more than nine months prior to the date of admission to trading;
  • have adequate working capital;
  • demonstrate appropriate levels of corporate governance. In practice, this means that your company should have at least one independent non-executive director;
  • have no restrictions on the transferability of shares; and
  • have the shares eligible for electronic settlement.

The PLUS Corporate Adviser will act as the sponsor to the issue of shares. Braxton can provide a list of them or introduce Capital Partners, our UK financial partner,which is approved by PLUS and member of PLUS. Braxton can introduce you to a number of other advisers will also need to be appointed to ensure relevant documentation is produced, including solicitors, accountants, financial PR (if appropriate) and a registrar.

Different routes to market
Your business can come to market through a number of different routes, depending on your flotation objectives.

  • Introduction: Businesses which don’t need to raise any funds but are simply looking to raise their profile or obtain an independent valuation of their business for employee share schemes, for example, can join by way of introduction. This is the most straight-forward and costeffective way of joining the market as your corporate adviser only has to file an admission announcement together with completed application forms.
  • Private Placement: It  is a fund-raising to a select number of potential investors, without requiring a full prospectus. Following the introduction of the Prospective Directive in July 2005, this can be to a maximum of 100 people. The corporate adviser files a private placement memorandum for the shares to be admitted to trading. As the placing memorandum is not for public release, it does not have to go into as much detail as a full prospectus, so the cost of coming to market in this way will be less than an IPO.
  • Initial Public Offering (IPO): If a business wishes to raise money from the widest pool of potential investors it will need to produce a prospectus unless the offering is less than €2.5m. Due to the detail and verification work that goes into producing a prospectus an IPO is the most expensive and time-consuming way of joining a public market.

Admission costs by any of these routes will depend on the “readiness” of your company for a public market, i.e. whether it requires restructuring, additional board members, ltd to plc status, etc. To obtain an accurate cost estimate, if you are considering joining the PLUS-quoted market, please contact us for further information.

The Corporate Advisor

The PLUS Corporate Advisor is a regulated member of PLUS and is authorised to bring companies to the market and provide advice on continuing obligations.  The advisor has an obligation to ensure that:

  • your company is suitable for the market; and
  • to provide advice on the eligibility and disclosure obligations of our rules.

There are two categories of adviseos, those with fund-raising capabilities and those without. If a company is seeking to raise funds when joining the market, it may wish to choose an advisor with a broking facility in order to minimise costs. When choosing a PLUS Corporate Advisor, we recommend businesses meet with a number of advisers to discuss their approach to flotation, fee structures and what access they have to investors.

The Advisor will also organise the roadshow to potential investors where companies will be required to present itself to people who may be interested in investing.

Once the PLUS Corporate Adviser has been chosen and instructed and when you are ready to sign an engagement letter, you may be asked to pay an up front deposit/instruction fee relating to the costs of flotation and to confirm the start of your relationship. A further fee will be charged on a successful completion of the flotation process. Thereafter, you will be charged an annual retainer fee by your PLUS Corporate Adviser for their continuing advice on complying with the Rules for Issuers.

The Lawyer
The role of the lawyer is key through all stages of the float process, and their advice includes preparing for the business the terms of engagement for the advisory team and advising on the preparation of the prospectus or private placement memorandum. The lawyer may also advise on any legal changes which are necessary and on any changes that need to be made to the Board.

In addition, the lawyer will also carry out any necessary legal due diligence into the company and will oversee the verification process of any public document. It is this due diligence, in conjunction with the work carried out by your company’s auditors, that will give your PLUS Corporate Adviser the comfort that your company is suitable for trading on a public market.

In a flotation, the lawyer often fulfils two roles, acting both on behalf of the company and also on behalf of the corporate adviser, for example preparing the placing agreement between the adviser and the company that governs any fund-raising process.

The Reporting Accountant
The reporting accountant is responsible to both your company and your PLUS Corporate Adviser and will carry out the financial due diligence on your company for the corporate adviser.

The reporting accountant’s role is to express an opinion as to whether the financial information included in the admission document, for which the company as the issuer is responsible, gives a true and fair view. The principal documents that the reporting accountant will prepare are the Working Capital Report, Long Form Report and possibly a Pro Forma Statement of Net Assets.

The Working Capital Report is a private document and is a review of the financial projections that are prepared by the company for the period following admission to trading. It supports the directors’ statement made in the prospectus on the sufficiency of working capital for at least a twelve month
period from the date of admission to the PLUS-quoted market.

The Long Form Report is a review of the historical activities of the company. The extent of the investigation and the level of detail required in the Long Form Report will be decided by the PLUS Corporate Adviser on the basis of their knowledge of the company, although it may include the following:
• corporate history and commercial activities;
• organisational structure and employees;
• trading results;
• assets and liabilities;
• cash flows;
• taxation;
• accounting policies and audit issues; and
• management information and control systems.

A Pro Forma Statement of Net Assets may be necessary ifthere is an acquisition or restructuring at the same time as the admission, in order to provide meaningful information for investors and to illustrate the effect of the acquisition or restructuring on the assets and liabilities of the new group.

In addition to the above, the reporting accountant can provide advice and assistance in respect of other matters such as taxation and corporate structuring, and will liaise with the other professional advisers involved in the transaction to ensure its smooth progress.

Making the most of your admission to PLUS
Once your company is admitted to the PLUS-quoted market, it would be wrong to assume that merely being on the market is enough to automatically attract investors and stimulate high levels of liquidity in the shares. To achieve this, it is essential that you continue to raise your firm’s profile following the flotation among existing shareholders and the wider investment community, and that you continue to update the market on any developments.

It is worth bearing in mind that whatever the level of sophistication of your investor relations efforts, there is no substitute for delivering a business growth strategy for the benefit of shareholders. Keeping investors informed is essential if you want to ensure that you achieve maximum benefit from being on a public market and that your flotation is a success. It is worth considering whether your company would benefit from the services of a Financial PR adviser.

Companies who are acquisitive or who will require further funds from the market should also consider retaining a broker on an ongoing basis. By acting as another voice in the market on your company’s behalf, your broker can help promote your company to potential new investors to gain the most from being traded on a public market.

PLUS Advertisers Opportunities

Some sites, for PLUS companies, offers the following:

  • Offers advertisers the opportunity to reach a high net worth audience of active traders through to institutional investors
  • Content includes information about PLUS traded companies ranging from latest news and prices, to historical data
  • PLUS also provides essential guidance to both domestic and international companies seeking to join PLUS, broadening its appeal to the highest levels of company management including; managing directors, finance directors and the entire business decision making sector

All media on PLUS is represented by the largest and most established advertising network of its kind in the UK

  • Spanning 15 business and financial sites it offers marketers the greatest choice available with one central buying and management point, therefore enabling greater scope for optimisation and network purchases
  • Advertisers on PLUS have come from different backgrounds including brokers (such as TD Waterhouse and City Equities), retail banking (such as HSBC and Barclays), through to business branding campaigns from Microsoft, British Airways and B.T.

In addition to the regular statistical publications, information on real-time daily trading can be accessed through a wide range of market data providers including:Thomson, Reuters, Fidessa, Telekurs, Proquote and Comstock.

Stock Market Site Presence

PLUS-quoted companies also benefit from a firm profile which can be found on the PLUS website. Each PLUS-quoted company has dedicated investor relations
pages which contain information such as a description of the business, real-time price information, report and account downloads, charts and a news filing system.

Companies are encouraged to make the most of their investor relations pages by linking them to their own website. The PLUS IR pages can also act as stand-alone websites in their own right providing a cost-effective way to promote your company to the online community.

Supporting Services for PLUS Listing
With our partners, including Braxton Capital and Capital Partners, our service offerings span the entire spectrum of the Mergers, Acquisitions, IPOs and Divestiture process, beginning with a thorough evaluation of a client company’s strategic situation, from a Pre-Deal assistance to a Post-Deal implementation.

We raise public-IPOs, private placements and debt and provides strategic advisory services in mergers and acquisitions (M&A) for growth companies.

  • Capital Partners Securities Ltd (CPS) is the Stockbrokerage division of Capital Partners Group Ltd (CPG).
  • Capital Partners Securities Ltd (CPS) is an Appointed Representative of Midas Investment Management Ltd (a member of the London Stock Exchange & Nominated Broker on AIM)
  • CPG is Authorised and Regulated by the Financial Services Authority
  • CPG is Authorised by PLUS Markets Exchange as Corporate Adviser for IPOs.
  • CPG is Member of Sharemark’s Adviser Network
  • Capital Partners America LLC is the US arm of CPG.
  • Capital Partners Asia is the Asian arm of CPG and operates with its affiliated firm Guandong Securities Ltd (a Sponsor member of the Hong Kong Stock Exchange).

You can find information about PLUS stock market costs in PLUS costs.