What are the benefits of dual listing?
Dual listing allows businesses to access new sources of investment on the global market, whilst maintaining their position under the umbrella of the London Stock Exchange.
We have seen the benefits first hand, with a number of PKF Littlejohn’s audit clients successfully listing on overseas stock exchanges, seeing promotion of market cap and gaining access to additional capital.
The combination of different time zones, with their varying trading hours, and geographical reach provides a more diverse investor base. This can help to hedge against local economic fluctuations in the future. It can also increase exposure to a range of investor strategies and preferences when looking for capital.
On top of funding, dual-listed entities benefit from enhanced visibility and a more prominent global profile. This increases their attractiveness to new partners and institutional investors and opens up fresh business opportunities.
Technical and regulatory considerations
Regulatory requirements on overseas markets, such as the PCAOB audit requirements in the US, are a barrier to entry for some and can significantly increase costs. On the plus side, they provide investors with a higher level of confidence and, as with the London Stock Exchanges, can improve a company’s credibility as a result.
Companies must follow local audit standards and ensure all regulatory filings meet the requirements of both exchanges. For example, in the US filings must comply with rules and standards set by the Securities and Exchange Commission (SEC), but in Hong Kong they fall under the Securities and Futures Commission (SFC).
So it’s important to give due thought to each exchange’s specific requirements. Here are some examples.
- Corporate governance structure and requirements can vary from exchange to exchange. Whilst some, such as AIM in the UK, do allow for adoption of other recognised codes, others are less flexible. The Main Market requires adoption of the UK Corporate Governance Code by all commercial companies with equity shares, under the new UK Listing Rules. On the other hand, the US doesn’t have a specific code. Instead, corporate governance is regulated through the SEC and stock exchange rules, as well as other state and federal regulations.
- Financial reporting frameworks can cause added complications when preparing annual and interim financial statements. IFRS are the most widely used standards. But reporting requirements can vary across stock exchanges so should be carefully considered when preparing accounts.
- Financial reporting timelines are generally around three to four months for annual reports. NYSE and Nasdaq have one of the shortest timeframes at 60 days for large accelerated filers. AIM, by contrast, allows six months from the end of the financial year.
- Shareholder communications and disclosures must be made in accordance with each exchange’s rules to ensure transparency and compliance with market abuse regulations.
- Tax implications should also be factored in, both from the listed entity’s perspective and to ensure sufficient communication of requirements for investors’ filings.
- Other specific requirements include minimum market capitalisation or liquidity thresholds.
Other considerations in light of current market conditions
The recent implementation and subsequent temporary suspension of the USA tariffs has sparked significant market volatility in recent weeks. Whilst there has been selective recovery reflected in certain entities’ share prices, others continue to face challenges, particularly those with trade exposure to countries where there is still significant exposure to high tariffs.
Whilst many see this as a barrier to entry, this can also give rise to opportunity in new businesses looking to list. With early strategic shifts, companies which are able to mitigate these associated risks, diversify into new markets and supply chains, could see their value increase whilst there is a perceived gap in the market.
How can we help?
PKF Littlejohn has expertise in working with a variety of global businesses listed on stock exchanges in the UK, the US, Canada, Australia and Singapore, amongst others.
We are a PCAOB-registered audit firm and provide audit services to companies listed on both Nasdaq and NYSE, and on other overseas exchanges including TSX and ASX. Our transaction services team has also worked with clients on a range of overseas listings, including dual listing processes.
Our in-house audit, transaction and tax advisory teams are complemented by the PKF Global network, with over 440 locations and 21,000 partners and staff worldwide. With rapid access to technical guidance and support from PKF offices around the globe, we are perfectly placed to help and advise on dual listings, both in the UK and internationally.
For more information about the regulatory requirements and challenges faced by companies looking to dual list on an overseas exchange, please contact Nicholas Joel or Jamie Legge.
