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Budget 2021: The Hill Review

Overview

Also published on 3 March was a review of the UK listing regime, led by Lord Hill. The Hill Review is an ambitious, forward-looking set of recommendations intended to encourage investment in UK business and increase the number of companies choosing to float in the UK (as opposed to listing in other jurisdictions). The review aims to strike a balance between high standards of governance and regulation with flexibility and nimbleness.  In particular, the review considers how to attract tech companies - who are currently under-represented on the UK markets compared to other jurisdictions - to list in the UK. However the implications extend more widely than that.

The recommendations include:

  • An additional duty for the FCA to take into account the UK's attractiveness as a place to do business when exercising its functions.

  • A rethink on the purpose of the prospectus and the type of transaction for which a prospectus is required.

  • A replacement of rules which can require trading to be suspended in SPAC shares with rules and guidance on information provision and investor rights, in the hope of breathing life into the UK's "dormant" SPAC market.

  • A simplification of the requirements for historical information and forward looking financial information, which companies in the tech / life sciences sectors may currently struggle to meet.

The Hill Review also considers the overall environment in which listing takes place, including tax rules and how to unlock pension investment. Tax submissions included a recommendation that any increase in corporation tax rate is offset with R&D relief (an issue already picked up by the government in its R&D relief consultation), a rethinking of the interaction with retail investors and separately with the way ISAs function to support longer term fund allocation, the introduction of a new tax-free long-term investment vehicle and whether the favourable treatment of AIM shares should be extended to other venues. The Review also comments that a recurring theme (and old chestnut) was the equalisation of debt and equity funding as a way of harmonising tax treatment for rapidly growing companies. There are a number of suggestions as to how the range of investments open to pension funds could be widened.

The Hill Review has been "strongly welcomed" by the Chancellor in his Budget, who announced that the government will work together with the FCA following the FCA's commitment to consult on changes to the listing regime. It will be interesting to see whether any of the submissions in relation to tax and pensions changes are adopted by the government.

Read the Hill Review


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