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Market reCap May 2014 edition
- Taxman stops stamping on growth shares
- Amendments to the Listing Rules take effect this month
- New disclosure regulations for extractive companies
- Consultation on the UK Corporate Governance Code
The new exemption from stamp duty and stamp duty reserve tax on growth shares took effect on 28 April 2014. The exemption applies to trades in shares on recognised growth markets such as AIM, the London Stock Exchange's High Growth Segment and the ISDX Growth Market.
The introduction of the exemption has been widely welcomed and is expected to improve liquidity and make investment in growing companies more attractive.
However, certain dual listed shares will not qualify for the exemption. This will depend on which other market their shares are traded and whether they are regarded by HMRC as being "listed on a recognised stock exchange" for the purposes of UK tax legislation. Tables indicating relevant markets are maintained on the HMRC website and examples include the ASX Market of the Australian Securities Exchange and the main board of the Hong Kong Stock Exchange.
The London Stock Exchange issued a Market Notice requiring companies on AIM and the High Growth Segment to certify to Euroclear UK and Ireland Ltd that their securities are admitted to trading on the relevant market and that they are not also "listed on a recognised stock exchange" for tax purposes. Companies are also required to review the list of exempt securities on the Euroclear website and to notify Euroclear immediately if it is incorrect. They must also give not less than two business days’ notice to Euroclear if their securities cease to qualify for the exemption in the future.
We understand that companies on the ISDX Growth Market have not been required to self-certify to Euroclear and are automatically being flagged as exempt in CREST.
Jonathan Brooks is a Partner in the Corporate Group of Field Fisher Waterhouse LLP in London.