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A Preliminary Study on the UK IPO Market Status and Regulation

  • Journal of International Business Transactions Law
  • Abbr : IBT
  • 2021, (32), pp.59-86
  • Publisher : The Institute for Legal Studies Dong-A University
  • Research Area : Social Science > Law > Private Law > International Commercial Transactions Law
  • Received : December 23, 2020
  • Accepted : January 22, 2021
  • Published : January 31, 2021

Chun, Changmin 1

1서울과학기술대학교

Accredited

ABSTRACT

Despite the recent Brexit mode, one of the attractiveness of the UK financial market is that London's status as an international financial center and the presence of the various and abundant pool of international investors might make enable relatively successful IPOs (Initial Public Offerings). In addition, due to the fact that underwriters' fees in the UK are lower than those in the US, the UK financial market is one of the best alternatives to the US market when Korean companies consider IPOs abroad, This article briefly introduces the legal issues that should be considered when venture capital backed Korean companies consider the UK securities market as target markets for IPOs and choose it as an exit route. First of all, by looking at the status of the UK IPO market and major exit methods, this article finds out the position of the UK IPO markets and its implications. Even if IPOs are not a major exit method in the UK, however, for Korean companies invested by Korean venture capitals, the UK market can still be considered one of the major IPO markets abroad. This is because if the main target markets of the applicant's products or services is in the UK or Europe, or main investors are located in the UK or Europe, the prospective Korean companies would be able to raise fund not only at the time of listing, but also at the time the companies grow and need continuous fund if the companies are listed on the UK markets. Further, It can be also advantageous for the companies’ promotion in the EU or UK. If Korean companies want to directly list their shares on the Premium Main market of the London Stock Exchange (LSE), it will require significant regulatory costs compared with other markets of the LSE. Therefore, it would be a reasonable option for Korean companies firstly to access the Standard Main market. Even in this case, however, there is an obstacle to prove that the reason why the Korean company’s shares are not listed in the home country i.e., Republic of Korea. Last but not least, the AIM as an IPO market suitable for small and medium-sized growth companies, could be actively considered. However, in the case of the AIM, the issue that the AIM does not allow the listing in the form of depositary receipts should be taken in to account.

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