On 28 February 2024, the Quoted Companies Alliance (QCA) published its response to the FCA Consultation Paper CP23/31 on the Primary Markets Effectiveness Review.

The response overall welcomes the FCA’s proposals for widening the sponsor competency requirements in the new listing regime. However, it flags that the proposals would benefit from being more extensive so that the new regime ensures there is a sufficiently large pool of potential sponsors on the new ‘equity shares in commercial companies’, or ESCC, listing segment given the increased number of issuers that will be required to seek such expertise.

The QCA suggests that the FCA should specify the competence criteria for relevant transactions to include prospectus work and admissions to trading conducted on AIM, Aquis and the Standard list, as well as takeover work, at the market capitalisation set out in the Listing Rules where such work has necessitated an understanding of the relevant rules, guidance and ESMA publications. This suggestion is intended to ensure that companies on the new segment will have access to a broader range of sponsors and their expertise to reflect the diverse nature of the businesses that will be listed under the proposed rules. The QCA’s view is that a non-exhaustive list of relevant transactions for sponsor competence should be provided to give clarity to market participants, as is currently the case on AIM for Nominated Advisers, for example.

Additionally, the QCA warns that the removal of the sponsor’s role from class 1 transactions and upcoming changes to the prospectus requirements for secondary issuances under the public offers and admission to trading regime will result in fewer sponsor declarations being submitted and therefore fewer opportunities for demonstrating sponsor competence unless the factors listed above are considered as relevant experience. Furthermore, the QCA argues clarity is needed on whether a sponsor declaration submitted prior to December 2021 at a market capitalisation below the current £30million threshold would be accepted under the sponsor competence requirements proposed in CP23/31.