CORPORATE - The London Listings Crisis: Can Legal Reform Save The UK’s Capital Markets?

Introduction

When ARM snubbed London for Nasdaq in 2023, it sent shockwaves through the City. Within a year, CRH had shifted its primary listing to New York, and Flutter Entertainment followed with a US primary listing in May 2024. London’s IPO market is now in freefall: just 18 IPOs raised £777.7 million in 2024, while 88 companies quit the market, the sharpest exodus since the Global Financial Crisis.

Why are Britain’s most prominent names turning their backs on London? Boards cite higher valuations, stronger investor demand, and richer analyst coverage in the United States. But the legal angle is often missed. UK rules on directors’ duties, shareholder rights, and takeovers make the market slower, stricter, and less flexible than the US market, such as Wall Street.

The Financial Conduct Authority (FCA) is fighting back. From July 2024, the FCA replaced the premium and standards segments with a single ESCC category. In January 2026, the Public Offers and Admissions to Trading Regulations (POATRs) will streamline prospectus rules. The key question is whether legal reform can rescue London’s relevance, or whether its decline is structurally ingrained.

The Decline of London Listings

London’s slide is stark. In 2021, the exchange hosted 126 IPOs worth £16.9 billion. By 2024, this had collapsed to 18 IPOs worth £777.7 million, the lowest in three decades. In the same year, 88 companies delisted, stripping depth from the market.

The reasons are commercial but reinforced by law. CRH justified its 2023 shift to New York on liquidity and higher valuations. Flutter highlighted broader access to investors. Analysts estimate US peers enjoy 30–40 per cent higher valuations, especially in technology and consumer sectors. Boards frame venue through s 172: if US markets deliver higher liquidity and valuations (as CRH/Flutter emphasised), they can evidence long-term shareholder benefit more readily than in London.

Even within Europe, London is losing ground. Frankfurt and Zurich are forecast to eclipse it as the region’s leading IPO venues. Meanwhile, the UK’s own investor base has withered: pension funds now hold less than 4 per cent of assets in domestic equities, down from over 50 per cent in the 1990s. With weaker local demand and stricter legal constraints, London is fighting an uphill battle.

Directors’ Duties in Venue Choice

UK directors must act in good faith to promote the company’s success for shareholders (Companies Act 2006, s 172). In Re Smith & Fawcett, the court confirmed this discretion must be exercised honestly and for proper purposes. In Re Southern Counties Fresh Foods, directors were reminded that “success” requires balancing different shareholder interests.

Applied to IPOs, this duty prompts boards to make cautious, process-heavy decisions. London’s stringent disclosure and governance rules make it more challenging for directors to demonstrate that a listing enhances long-term shareholder value. IPOs take longer, require more due diligence, and carry heavier advisory costs. By contrast, US markets offer faster execution and permissive dual-class structures, which directors can justify as more consistent with s 172’s focus on securing capital efficiently.

Thus, the law itself deters some London listings: not by directly lowering valuations, but by slowing timelines and increasing risks compared to Wall Street.

Large corporations have openly cited this disparity. CRH and Flutter’s boards both pointed to US regulatory flexibility and faster deal execution as decisive. Practitioners argue that streamlining disclosure and clarifying directors’ duties in the context of listings, without diluting investor protection, could make London more competitive.

Governance Trade-Offs: Founder Control vs Investor Protection

In the US, dual-class shares allow founders to maintain control indefinitely, Alphabet and Meta being classic examples. Until 2024, London resisted. The FCA’s new ESCC regime now permits weighted voting shares at IPO. There is no general time limit; rights can last indefinitely unless held by institutional investors, in which case a 10-year expiry applies. No new weighted shares may be issued after the IPO, and they cannot be used in sensitive matters, such as discounted issues or cancellations of listings.

For founders, this is a win. For investors, it is an erosion of the “one share, one vote” principle. UK institutions have pushed back, warning of weaker accountability. Lawyers sit at the centre: drafting IPO constitutions, advising on compliance, and negotiating carve-outs that balance control with investor protection.

The Takeover Code and Mandatory Bids

Rule 9 of the Takeover Code requires any shareholder acquiring 30% or more of the voting rights to make a mandatory bid for the remaining shares at the highest price paid in the past year. This enshrines equal treatment for minorities.

However, it conflicts with dual class shares under the ESCC regime: founders can consolidate control without exceeding the 30 per cent threshold. The Takeover Panel is reviewing the interaction between the two regimes, creating uncertainty for issuers.

For lawyers, the task is to design structures that avoid inadvertent Rule 9 triggers, or to seek a “whitewash” approval from independent shareholders. These complexities make UK listings legally stickier than in the US, where no such mandatory bid rule exists.

FCA Listing & Prospectus Reforms

From July 2024, the FCA scrapped premium and standard listings, replacing them with a single ESCC category. This disclosure-based regime reduces mandatory shareholder votes, making London listings lighter and faster. For prospective listers, the change trims execution risk: fewer shareholder votes mean less timetable uncertainty and fewer circulars to draft.

From January 2026, the Public Offers and Admissions to Trading Regulations (POATRs) will further streamline prospectuses. Companies can now issue up to 75 per cent new shares without a prospectus (up from 20 per cent), and IPO prospectuses need not be public for only three working days (down from six). This shortens the public exposure period and reduces the risk of volatile market conditions undermining an offering.

The FCA projects annual savings of £40 million. For lawyers, fewer shareholder votes and a higher prospectus threshold reduce verification work and circular drafting, while the 3-day window compresses diligence, forcing advisers to front-load disclosure controls and transaction sign-offs. 

Yet, the reforms are procedural. They remove friction, but they cannot fix London’s valuation and liquidity gap with the US. Bridging that divide may depend less on law than on market reform; reviving UK pension investment in equities and expanding analyst coverage could restore depth and valuation confidence.

Practice Implications for Corporate Lawyers

The slump has reshaped mandates. More UK issuers now seek dual listings with New York, requiring coordination across disclosure regimes (UK MAR vs US Reg FD), reconciled governance frameworks, and synchronised timetables across time zones.

Under the ESCC, sponsors and their lawyers shoulder greater responsibility, as fewer shareholder votes necessitate a higher quality of disclosure. Prospectus reforms will add time pressure, with IPO documents required only three days before admission.

Looking ahead, reform debates continue: pension regulation may be loosened to channel more domestic equity demand, while the Takeover Panel may revisit Rule 9. For global firms, these shifts are an opportunity; for mid-tier UK practices, the challenge will be staying competitive.

Conclusion

London’s listings decline reflects law as much as economics. Directors’ duties, investor-protection rules, and the Takeover Code make the UK structurally less flexible than Wall Street.

The FCA’s reforms, ESCC listings and the new prospectus regime are welcome. They simplify, accelerate, and cut costs. But they are procedural. Without more profound changes, reviving the UK’s investor base and modernising takeover rules, London risks a permanent loss of status.

For lawyers, this is a pivotal moment. They are not only guiding boards through new rules but also shaping the debate on what reform must come next.

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BIBLIOGRAPHY

Legislation & Regulation

• Companies Act 2006.

• Financial Conduct Authority, Policy Statement PS24/6: UK Listing Rules (29 July 2024).

• Financial Conduct Authority, Policy Statement PS25/9: Public Offers and Admissions to Trading Regulations (15 July 2025).

Cases

• Re Smith & Fawcett Ltd [1942] Ch 304 (CA).

• Re Southern Counties Fresh Foods Ltd [2008] EWHC 2810 (Ch).

Articles

• Financial Times, ‘CRH set to shift primary listing to New York’ (London, 2 March 2023) https://www.ft.com/content/31d94f56-531d-4a3e-88b1-d5a808c6c7a6.

• Financial Times, ‘Flutter shareholders back move of primary listing to New York’ (London, 1 May 2024) https://www.ft.com/content/9b5c6578-18f6-46a9-b7af-b5e4f1ee2e1d.

• Financial Times, ‘UK pensions slash exposure to domestic equities’ (London, 27 March 2023).

• Reuters, ‘Flutter joins exodus of London-listed companies heading to US’ (London, 31 May 2024) https://www.reuters.com/business/finance/flutter-us-primary-listing-2024.

• Reuters, ‘Frankfurt, Zurich poised to eclipse London in IPO pipeline’ (Zurich, 27 August 2025).

Other Authorities

• EY, IPO Eye: Q4 2024 (EY, January 2025).

• SEC Form 10-K, Alphabet Inc (2023).

• Skadden, ‘New UK Listing Rules: Key Changes for Dual-Class Structures’ (Briefing, July 2024).

• Freshfields Bruckhaus Deringer, ‘FCA Listing Reforms and the Takeover Code: What Companies Need to Know’ (Briefing, 2024).

• Skadden, ‘New UK Prospectus Rules Published’ (Briefing, July 2025);

• Freshfields Bruckhaus Deringer, ‘FCA Confirms Prospectus Overhaul’ (Briefing, July 2025).