Nine costs that incurs when becoming a publicly listed company
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Do you know that there are hidden costs involved in a placing that investors have not taken into account? Before the business can invest in their operations they need to pay off a lot of costs to maintain its status as a publicly-listed company. Be wary if some companies raise a few hundreds of thousands of pounds because they are trying to pay off these costs, instead of using it to add value to their operations!
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Nine costs that incurs when becoming a publicly listed company
- 1. Nine costs for retail investors to consider CostsoflistingintheLondonStockExchange (LSE)
- 5. Youshouldbealarmed Because the only way a publicly-listed company survives is to ask you for cash!
- 6. Here are nine costs a publicly-listed are obligated to pay before the money goes into business operations ESPECIALLY,WHENMANAGEMENTASKFORFURTHER FINANCING!
- 7. 1. Further share issue In any stock market in the world, when a company issues new shares they need to pay a fee to the Stock Exchange! In the London Stock Exchange, you pay the following: For companies listed on the primary market, it has to pay a maximum fee £165,000 to raise up to £500m. Above that it need to pay £118 for every new million pounds raised. There is a 20% VAT tax on top! For companies listed on the AIM market, it has to pay £166 for every million pounds raised between £5m-£250m. But maximum fee is limited to £44,590.
- 8. 2.TostaylistedontheStock Exchange The main market For the AIM market Need to pay the charge of £6,250, regardless of size 20% VAT applies! £6,250 minimum fee for companies with market cap of £0 to £50m. £52,000 maximum for firms that have a market cap greater than £500m or above.
- 10. Companies Revenue Market Cap. Audit fees 1.4DPhrama £0 £481m £20,000 2.ZincOxResourcesplc $38m(£25m) £1.18m $130,000(£86,000) 3.RoyalDutchShell $421bn(£277bn) £56.6bn (reflect London-listed element) 4.Tesco £62bn £11.7bn $50m(£33m) £5.4m
- 11. 4. Tax Compliances Payingtaxesapplytoeverybusinessowner However,somepublicly-listedbusinesseswouldshowhow muchtheypayfortaxservices,andotherscompanieswouldtie ituptootherlegalandprofessionalcostslike4DPharma Again,theamountoftaxcompanies’ paydependsonthesizeof itsoperations.
- 12. Companies Revenue Marketcap. Taxcompliancefees 1.ToppsTiles 2.ZincOxResourcesplc 3.RoyalDutchShell 4.Tesco £195m $38m(£25m) $421bn(£277bn) £62bn £297m £1.18m £92bn £11.7bn £70,000 $28,000(£18,421) $1m(£657,000) £0.9m
- 13. 5.RNSreleases RNS releases are a way for companies to communicate to shareholders. The purpose of the RNS is to give breaking news (it a written form) that affect the firm’s market value. Companies listed on the London Stock Exchange will have to pay £20,000 per annum to release real-time information or, £13,500 per annum for delayed information. There is another £5,000 per annum payable to the stock exchange to release RNS via XML feed though there is no charge via Millennium Exchange.
- 14. 6.Non-Executivedirectors The ‘Overseers’ of the company are independent directors who ensure the business is probably run They also chair board meetings relating to Remuneration, Nomination and Audit committee. If companies are non-revenue producing Then you the shareholders have to foot the bill for these non-executive directors!
- 17. 7. REGISTRARS A registrar is going to keep a register of who own the company’s shares. In the UK, there Are three registrars (Capita, Equiniti and Computershare). Other tasks a registrar does are to pay dividends to shareholders, provide shareholders information for lost share certificates and trace the history of companies that changed its name, gone bankrupt or been taken over.
- 18. 8. Nominated adviser A nominated adviser or NOMAD, advises companies listed on the AIM market. The financial adviser needs to have experience in advising companies on listing in the market and delisting from the AIM market.
- 19. 9. Broker The role of a role broker is to help the company to assess the level of interest in its shares, advice on market and trading issues, provide advice on the pricing of shares and investment opportunities.
- 20. ALL THREE of these services (registrars, NOMAD and broker) all cost money. That depends on the individual financial services firm they choose Sowithallthesecostsinvolved,beforethecompanycaninvestinits operations,WEMUST.....
- 21. REMEMBER WHEN COMPANIES ARE ASKING TO RAISE A FEW 'HUNDRED' THOUSANDS OF POUNDS FOR A CONSISTENT PERIOD OF TIME THAN......... its looking for you, the retail investor to foot the bill of the ABOVE COSTS.
- 22. Want to know more? Then Checkoutmyblog OR WANTTOLEARNMOREABOUTFUNDRAISINGCLICKTHE ABOVE