Building the Framework: Legal Considerations for a London IPO

London has long been a leading destination for companies, particularly growth companies, looking to go public. In this five-part series, we explore why US-incorporated and US-operated private companies would consider an initial public offering (“IPO”) on the London markets and the key considerations they need to evaluate when planning and preparing for such a listing. 

For US companies, particularly earlier stage and growth companies, the market opportunities and regulatory environment in the UK can offer certain advantages over US markets. These can include reduced ongoing compliance burdens and a lower litigation risk. However, alongside these opportunities there are new considerations that must be navigated, including around corporate structure, governance requirements and cross-border regulatory compliance. In this article we will review some of the key legal decisions that need to be worked through by a US company pursuing an LSE listing.

What are the key questions the board of a US-incorporated or US-operated company should be considering ahead of listing?

There are a variety of questions that the board of a US-incorporated or US-operated company may need to contend with as part of the listing process. The issues that arise will depend upon the specific company to be listed, its stage of development and its aims for the future. However, the questions that commonly arise include:

Which jurisdiction should the company to be listed (“ListCo”) be incorporated in?

Many companies with significant US operations will naturally be operating using a US-incorporated vehicle. When considering a listing on the LSE, the management team of the company will need to consider whether to: (i) pursue a direct listing of the US-incorporated vehicle; or (ii) undertake a reorganisation to insert a holding company, usually incorporated in a different jurisdiction (typically the UK), into the group structure to be the ListCo. This decision will need to be taken early on in the process as it will have an impact on the workstreams that will need to be completed later in the listing process. The structure that is best for a particular company or group will depend on that company or group and is likely to be driven mainly by regulatory, tax and/or investor relations matters rather than a legal requirement to have a particular structure.

There are many examples of companies that have pursued a direct listing of a US vehicle as well as others who have completed a reorganisation and inserted a UK-incorporated holding company into the group structure. Between 2017 and September 2025, more than half of the US-operated companies that listed on the LSE have opted to incorporate a UK holding company into their structure as the listing vehicle. However, more than 18% retained their US-incorporated vehicle, the majority being Delaware companies. By way of recent example, AOTI, Inc. is a Florida incorporated for profit corporation which listed its common shares onto AIM in 2024, whereas MicroSalt plc, which also listed on AIM in 2024, is an English incorporated limited company that conducts its main operations through a Florida incorporated operating subsidiary. 

51.2%

Proportion of US-operated companies listing on the LSE using a UK-incorporated holding vehicle (2017-Sept 2025)

When making the decision whether to proceed with a US vehicle or conduct a group reorganisation to insert a holding company into the structure, there are a few implications from a legal perspective which may impact the decision:

• Electronic trading and depositary interests - Shares of companies incorporated outside of the United Kingdom, Ireland, Jersey, Guernsey and Isle of Man cannot be settled directly into CREST (the system used to settle electronic transactions in listed company shares). As a result, overseas-incorporated companies are required to deposit their shares with a CREST nominee or registrar who then issues UK-registered securities known as ‘depositary interests’ (“DIs”) or ‘depositary receipts’ (“DRs”) which can be traded in the CREST system. In practice, shareholders are unlikely to experience any significant differences whether trading shares directly or through DIs or DRs, however the requirement for overseas companies to engage and retain a depositary adds a layer of complexity which would not apply with a UK-incorporated ListCo and will involve costs, although these are generally not considered to be significant in the context of the overall transaction. There may also be an element of investor education required in relation to the DR/DI system, although most institutional investors are likely to have experience of it. 
  
  
• Constitutional documents - English law and regulation provides certain protections to shareholders which may not be provided for under local laws applicable to a US company. For example, US-incorporated entities would not be subject to the UK City Code on Takeovers and Mergers (the “Code”) and so investors would not benefit from the protections that are provided for in the Code if a takeover offer was made. If it was determined that a direct listing of a US-incorporated company was preferred, investors may expect that the constitutional documents of the company had been amended to provide some of the protections that are not available under local law. Commentary would be included in the listing document to confirm where amendments had been made to include customary UK-style protections. Where there are differences between the protections afforded to English-incorporated companies and US-incorporated companies, these would also need to be flagged.
  
  
• Application of US Securities Laws - Any offering of securities is required to be registered with the US Securities Exchange Commission (“SEC”) under the US securities laws, which have extra-territorial effect. There are certain ‘safe harbours’ available under Regulation S (promulgated under the US Securities Act of 1933) which apply to exempt an offering from SEC registration in certain circumstances. For example, companies incorporated outside of the US may be classified within a safe harbour provided that offerings are made outside of the US, there are no direct selling efforts into the US and there is no Substantial United States Market Interest in the company’s shares. However, there are nuances to this exemption that must be complied with. Where a US company is considering a listing, local law advice must be sought to ensure any registration requirements, and, where relevant, safe harbour rules, are complied with. The decision on whether to list a US-incorporated entity directly or complete a reorganisation will have an impact on the costs incurred by the company and the ongoing advice required following the listing.

As noted above, tax considerations will also have an impact on whether the company proceeds to list a US-incorporated vehicle or an overseas one. In particular, US companies will need to consider the impact of anti-inversion rules, which seek to prevent corporate inversions by providing different methods of taxation where it appears that corporate actions have been undertaken with the intention of avoiding US taxes. Companies are strongly advised to seek separate tax advice on this point at the relevant time.

Delaware

The state of incorporation used by the majority of US-incorporated companies that listed on the LSE (2017-Sept 2025)

Is the board composition right for an LSE-listed company?

Board composition is an important consideration at this stage as the board needs to have the right balance of skills and experience to succeed as an LSE-listed company. The mix of skills and experience required includes representatives with appropriate business, finance and local market (whether Main Market or AIM) experience as well as other characteristics required to comply with corporate governance requirements. 

Diversity within the boardroom is a prominent theme in the UK Corporate Governance Code (required to be adopted by Main Market listed companies). The UK Listing Rules (also applicable to Main Market companies) go further and require listed companies to disclose against specific targets including the presence of women in at least 40% of board positions, one senior board role held by a woman and at least one board member from an ethnic minority background. The requirements of AIM are not as stringent as those of the Main Market, although the Quoted Companies Alliance’s Corporate Governance Code (usually adopted by AIM listed companies) encourages boards to consider both protected characteristics, such as gender, ethnicity, and disability, and broader elements like cognitive diversity and socio-economic background when deciding the make-up of the board.

“…the board needs to have the right balance of skills and experience to succeed as an LSE-listed company…[including]… appropriate business, finance and local market…experience”

When considering the governance requirements for London-listed companies against requirements in the US, there are some significant differences other than in relation to diversity. For example:

• Separation of board roles - While earlier stage companies may combine certain board roles, such as the chair and chief executive officer roles, these should be separated when the company is contemplating a listing. The separation of roles helps to ensure that directors are able to hold each other to account and that the board is not dominated by a single individual or small group. This is particularly important from a corporate governance perspective and for potential institutional investors.
  
  
• Independent directors - While specific requirements vary between the Main Market and AIM, all listed companies will need to ensure appropriate independent representation on their boards. The number of independent directors required will depend on the individual company, however there should be a sufficient number so that they can provide a sounding board and moral support to each other and provide reassurance to investors that independent views carry sufficient weight on the board. Attention will also need to be paid to maintaining the independence of directors as this can be easily compromised, for example through participation in certain remuneration schemes. The presence of independent directors on the board will be particularly important when constituting board committees as set out below.
  
  
• Committee structure – As mentioned above and in article 3, certain board committees will need to be formed in preparation for the listing. These typically include an audit committee, which may also encompass a risk focused element, a remuneration committee and potentially also a nomination committee and/or a disclosure committee. These committees are generally formed of independent non-executive directors to ensure appropriate independent oversight of the board, therefore the presence of independent directors on the board is particularly important in this context.

It is not unusual for an LSE-listed company to appoint additional non-executive directors to the board around the time of listing, although any appointments should be considered in plenty of time ahead of admission to allow for appropriate candidates to be identified, for an appointment process to be followed and for the successful candidate(s) to acquaint themselves with the company ahead of admission. Companies should have discussions with their corporate finance and legal advisers ahead of starting the listing process to ensure that, where required, appropriate candidates can be identified, interviewed and appointed ahead of the proposed listing date.

What other legal issues might arise during the listing process? 

While the legal issues that may be identified are specific to that company (or group), there are some themes which tend to come up more often than others. These include:

• Intellectual property (“IP”) – The main asset of many companies, particularly those at an early stage, is IP. This may be registered or unregistered, it may be owned outright or licensed. The main question that the company’s advisers and potential investors will be concerned with is how secure the company’s rights to the IP are. Key questions will include whether the IP rights are owned by the company, whether from the outset or through assignment, or if they are licensed - if so, from whom, for how long and on what terms? The identity of the creator will also be of interest and will likely tie into the question of whether appropriate assignments have been made. This will be a core element of the diligence process for companies in the life sciences and technology industries but will likely extend beyond these sectors given the importance of IP to early-stage companies.
  
  
• Licensing and extraction rights – Similar to the requirement for companies to ensure that they have appropriate IP rights, natural resource companies will need to ensure that they have appropriate and sufficient rights to the resources they own. These rights may be owned outright and/or there may be licences in place granting rights to the company. In making their investment decision, investors will be interested in whether the company is able to extract and exploit the underlying resources that they claim to own. As mentioned in article 2, technical reports are likely to be required in relation to the resources the company has rights to. However, while these may help to confirm the resources available, the company will need to have appropriate rights to these resources to convince potential investors that there is a basis to make an investment in the company.
  
  
• Artificial intelligence (“AI”) and data protection – As the use of AI continues to expand in business, its prevalence as part of the diligence discussions for potential listing candidates is also increasing. The extent to which AI has been used in creating and developing the company’s products will determine the level of diligence required. However, where AI has been used in development, there will be a focus by the company’s advisers on how the product has been developed, where AI has featured in this development and what data that has been used to build the product. Companies should ensure that their products are trained using data that is owned and developed solely by the company or that they have appropriate consents in place to use the relevant data and information in its development. Data protection matters are an area of increasing focus for companies in all sectors, particularly in the current market environment.
  
  
• Material contracts – Contracts with suppliers and/or customers entered into during the early stage of the company’s development are likely to be on the counterparty’s terms and conditions. This is not a concern in itself, however these terms will need to be reviewed to identify any onerous or unusual terms, such as indemnities provided by the company, which may need to be renegotiated or disclosed to potential investors. Where the company’s business, and so the investment case, is reliant on particular contracts or ongoing arrangements, the company’s advisers will look to ensure that the terms of all agreements are properly documented in writing and any ongoing obligations are clearly identified. This may be particularly relevant to companies in the retail and consumer industries where there are arrangements which include delivery targets or minimum spend requirements. Where any arrangements are not documented, it may be necessary to negotiate with the counterparty to ensure written terms are in place prior to the IPO. 
  
  
• Employment arrangements – Many companies at an early stage, particularly those that remain founder led, may not have entered into written employment agreements with certain members of the senior management team. Those that have been entered into may not be fit for purpose, for example not containing appropriate IP provisions or restrictive covenants. All listed companies are expected to have appropriate arrangements in place with all employees and where this is not the case this will need to be rectified prior to admission.
  
  
• Corporate history – the company’s listing document will need to set out details of the company’s history, including its share capital. Many growth companies conduct a variety of smaller funding rounds prior to a larger corporate transaction such as an IPO and they sometimes also undertake corporate activities such as share buy-backs to appease investor demands. The company’s legal advisers will need to review this history as part of their due diligence exercise and ensure that all corporate actions have been properly authorised and completed. Remedial action may need to be taken where this is not the case. The advisers will also need to review any existing shareholders’ agreements that are in place, although these will generally need to be terminated on admission along with any preferential rights that may have been granted to investors prior to the IPO.  

What are the key legal workstreams that will need to be completed as part of the IPO?

Preparing for a listing can be an intensive process for a company’s management team. The work that needs to be undertaken for the listing is usually expected to be completed in addition to the ‘day job’ of running the business. This can cause tensions when requests are received from multiple advisers on different matters and the management team feel they are being pulled in a variety of directions. 

Understanding the legal framework that needs to be worked through as part of the listing process is crucial for effective preparation and resource allocation. Completing at least some of the legal preparations – or understand what the plan is for these - ahead of the formal kick-off meeting can help to make the process smoother. 

“Preparing for a listing can be an intensive process. Work needs to be completed in addition to the ‘day job’ of running the business so preparation and understanding of the process from the outset is key.”

While the listing process will naturally be slightly different for each company, depending on its individual characteristics and stage of development, the key legal workstreams are likely to be the same in most processes. These include:

• Pilot fishing – Often the first stage of the IPO process for a potential listing candidate is to undertake a pilot fishing exercise. This was touched on in articles 1, 2 and 3. To prepare for the pilot fishing meetings, the company, its corporate finance adviser, broker and public and investor relations adviser will prepare a short slide deck which can be shared with potential investors to gauge their interest in the company. The presentation will be reviewed by the legal advisers and subjected to a verification process, as any other document being presented to potential investors will be. Once this process has been completed, the company will proceed with the meetings and an analysis will be undertaken on whether there was sufficient investor interest to proceed with the listing now or if further preparatory work needs to be undertaken before the process commences.
  
  
• Legal due diligence – Aside from their involvement with the preparations for the pilot fishing process, the initial focus for the company’s lawyers will be to conduct an in-depth examination of all legal and regulatory areas of the business. This is likely to include corporate structure, financing arrangements, contracts, intellectual property, data protection, employment and regulatory compliance, among other areas. The focus of the legal due diligence is to identify risks that need to be disclosed to potential investors in the listing document and the scope will be agreed with the corporate finance adviser and their legal counsel. Unlike in the US, the due diligence is reported on in a written report and this is addressed to both the directors of the company as well as to the sponsoring investment bank or AIM nominated adviser. Where possible, issues identified can be resolved prior to listing and those resolutions may be reported upon, but some of the issues may not be capable of rectification prior to, or even after, listing. Any issues identified will need to be appropriately disclosed to potential investors in the listing document. It should be noted that the legal due diligence process is conducted in addition to the financial, commercial and any technical diligence process that is required.
  
  
• Investor presentations – Where a company is completing a fundraising simultaneous with admission, an investor presentation will be prepared by the company in conjunction with the corporate finance adviser, broker and public and investor relations adviser. This will be used as part of the management meetings with potential investors that take place shortly before listing. As with the pilot fishing presentation, the investor presentation will be reviewed by the legal advisers and subjected to a verification process. Any amendments proposed as a result of the verification process should be incorporated into the final presentation. As mentioned in article 2, the ‘IPO roadshow’ will be coordinated by the company’s broker and usually involves presentations to both existing and potential investors to persuade them to invest in the company. 
  
  
• Listing Document – A listing document will need to be prepared and the form of this will differ depending on whether the company is intending to list on the Main Market (where a prospectus is required) or AIM (which usually requires an AIM admission document) and any particular requirements of the listing category to which the company will be admitted. Broadly, the document will incorporate sections covering the company, its business and future plans, its historical financial information, the general taxation position for investors, detailed information on the share history, constitutional documents, director and significant shareholders’ holdings and material contracts entered into by the company, and a list of ‘risk factors’ that are specific to the company and the securities being offered. Depending on the industry sector the company is operating in there may be a requirement for a separate technical report and we covered this in article 2. The legal advisers will take a lead role in preparing the document, alongside the corporate finance adviser, and while the company will be required to provide input into the drafting, much of the legal content will be led by the results of the due diligence exercise. Overall, the listing document will need to provide investors with sufficient information to enable them to make an informed view on the investment that they are making. The legal advisers, along with the other company advisers, will help to ensure that the relevant questions are asked to meet this standard. 
  
  
• Verification – As the investor presentation and listing document will be provided to potential investors, they will each be subjected to a verification process prior to circulation. This involves each statement of fact or opinion in the document being verified against independent, third-party sources to ensure the statements are correct or based on reasonable beliefs. Where necessary, unsubstantiated data or statements will either be removed or revised.  The verification process is intended to protect the directors of the company from making false or misleading statements, whether intentionally or inadvertently. This is required because the directors take responsibility for the contents of the presentation and listing document, ensuring that statements are not made to potential investors which might expose the company to litigation in future and providing a record of the justification for including statements.

There are various ancillary workstreams that will also need to be covered by the legal advisers. These may include the preparation of appropriate employment agreements for the board and other employees, the preparation, or review, of policies that the company is expected to have in place at the time of listing and the creation of board committees to comply with relevant corporate governance requirements. The amount of preparatory work will depend upon the stage of development of the company ahead of the IPO process.

When should the board start thinking about the legal considerations that might impact the IPO?

Given that many of the legal considerations that need to be worked through relate to structure and governance, companies looking to complete a London listing are advised to start their legal preparations around 12-18 months before the anticipated listing date. This will allow sufficient time to address structural considerations, rectify any initial issues that are identified in an IPO readiness review, complete necessary due diligence and ensure compliance with both UK listing requirements and applicable US securities laws, before management are pulled into the other workstreams that form part of the listing process.

What legal issues will the company need to be aware of following listing?

A variety of legal issues are likely to arise during the lifecycle of a listed company, whether as a result of expansion plans which require a new group entity to be incorporated, an employment related issue, the desire to implement a new share option scheme or a dispute in relation to a material contract. As with the issues related to the IPO, those that arise will be dependent on the company and its plans for the future. 

The company should be cognisant of any issues which have been highlighted in due diligence and have not been resolved prior to the IPO. There may be some matters which can be dealt with following the listing and if there are any undertakings in any of the other transaction documents to resolve matters within a particular timeframe, these will need to be completed. 

One other issue that all companies will face is around disclosure of information to the market. One of the most important expectations for companies listed on the LSE is that they ensure that any non-published price-sensitive or ‘inside’ information must be disseminated to all stakeholders simultaneously through a Regulatory Information Service (RIS). This is required to prevent market abuse resulting from certain persons being privy to sensitive information that the market is not aware of. Internal policies and procedures will have been put in place ahead of listing to ensure that obligations are complied with, but management will need to be aware of these and comply with them so that announcement obligations can be complied with promptly and within any reporting deadline set by the relevant market or statutory rules. 

What else should the company be thinking about at this stage?

• Company secretary – While the company may not have considered appointing a company secretary during the early stages of its development, or may have combined this role with another board role, it should consider an appointment (or separating the roles) prior to an IPO. A company secretary can play a vital role in relation to both legal and regulatory compliance and also take a proactive and central role in ensuring good governance at the company. A company secretary can support the board in preparing for board and shareholder meetings and generally act as a trusted adviser to the chair and the board.  
  
  
• Concert party/parties – As noted in article 2, where the ListCo is a company which is subject to the jurisdiction of the Panel on Takeovers and Mergers (the “Panel”), an exercise will need to be undertaken to identify any investors who are considered to be ‘acting in concert’ (co-operating with each other pursuant to an agreement or understanding (whether formal or informal) to obtain or consolidate control of the company or to frustrate the successful outcome of an offer for the company) and so form part of the ‘concert party’ for the purposes of the IPO. The legal advisers will likely be involved in helping to conduct the analysis and reviewing the submission to be shared with the Panel. They will also assist with drafting the relevant sections of the listing document to cover the results of the analysis.
  
  

  “One of the most important expectations for LSE-listed companies to understand is the importance of ‘inside’ information being disseminated to all stakeholders simultaneously through an RIS”

• Financial information – Although not a legal issue, one of the key elements of the listing process which takes a significant amount of time and management attention is the preparation of the company’s historical financial information. Companies are advised to consider what will be required in this regard ahead of commencing the listing process. We covered this point in detail in article 3.
  
  
• Internal project management – As the listing process is run in parallel with the day-to-day business of the company, it is useful for the internal team who will be involved in the transaction to be assembled early on and advised of what will be required. Some companies appoint a specific individual, usually someone relatively senior who is not an executive director, to be responsible for co-ordinating and streamlining requests from external advisers and liaising internally to obtain the information required. It is also increasingly common for companies to consider appointing an external adviser with experience of acting on an IPO to help with this so that the management team can continue to focus on the business.

What’s next?

The legal considerations for US companies pursuing a London listing are multifaceted and require careful planning and expert guidance. From fundamental decisions about corporate structure and jurisdiction of incorporation to ensuring compliance with cross-border securities laws and UK governance expectations, each element requires thorough consideration and can benefit from professional advice.

London provides an attractive alternative to US public markets, particularly for growth-stage companies. However, the key to success lies in early preparation and understanding that while the legal framework may be complex, the benefits of a London listing - including access to active institutional investors, lower ongoing compliance costs and reduced litigation risk - can make the effort worthwhile for many US companies.

Companies considering a London listing should engage with experienced legal advisers well in advance of their anticipated listing timeline. This early engagement allows for proper evaluation of structural options, identification of potential issues and development of a comprehensive plan that addresses all legal requirements while positioning the company for a successful public offering.

The legal framework is just one piece of the puzzle, but it is a crucial foundation that can determine the success of a London listing. Companies that invest the time and resources to understand and properly navigate these legal considerations will be best positioned to capitalise on the significant opportunities that London's markets offer to US companies.