| IPO | Admission with an offer of shares to investors |
| Direct listing / introduction | Admission of existing shares without a placing |
| Prospectus on the Main Market | FCA-approved prospectus before first admission, unless an exemption applies |
| Prospectus on AIM and Aquis | MTF admission prospectus on first admission |
| Free float | Main Market 10%, Aquis Access 10% (enterprise company 25%), Aquis Apex 25% |
| Updated | November 2026 |
Two roads, one destination
In a classic initial public offering the company offers shares, new ones or those of existing shareholders, and has them admitted to trading at the same time. A direct listing has no such offer. The shares that already exist are simply admitted to trading, and the market sets the price from day one.
The UK tax authority recognises both roads. Describing the new stamp duty relief for new listings, HMRC speaks of a company listing its shares on an exchange through an IPO or an introduction (for example a direct listing). So an introduction is no grey area; it is an accepted route.
IPO and direct listing compared
| Point | IPO | Direct listing / introduction |
|---|---|---|
| New shares | usually yes | no |
| Shareholder base | created by the placing | must already be broad enough |
| Prospectus on the Main Market | yes, FCA-approved, unless exempt | yes, FCA-approved, unless exempt |
| Admission document on AIM and Aquis | MTF admission prospectus | MTF admission prospectus |
| Free float | reached through the placing | must already exist |
| Electronic settlement | required | required |
FCA PS25/9 and PS24/6; AIM Rules for Companies (August 2026); Aquis Growth Market rulebooks (January 2026)
No offer does not mean no prospectus
The UK's new prospectus regime has applied since 19 January 2026. For the Main Market, a regulated market, it works through the FCA's new rulebook, Prospectus Rules: Admissions to Trading on a Regulated Market, or PRM. Its basic rule: unless an exemption applies, securities may be admitted to trading only after an FCA-approved prospectus has been published. Whether any shares are sold makes no difference to that duty.
On AIM and the Aquis Growth Market, both primary multilateral trading facilities, the new rules require an MTF admission prospectus for first admission. The FCA does not review or approve this document; responsibility lies with the company and its advisers. On AIM the applicant produces an admission document under the AIM Rules; on Aquis an Aquis corporate adviser is appointed for the prospectus document. The new regime in detail is under prospectus regime since January 2026.
The free float has to be there already
This is the real hurdle of a direct listing. On the Main Market, distribution to the public counts as sufficient when 10% of the shares for which admission is sought are in public hands. Shares held by directors, their connected persons and certain employee schemes do not count. On top come an expected total market value of at least £30 million for the shares and the duty to appoint a sponsor.
On the Aquis Growth Market, the Access segment asks for a 10% free float, or 25% for an enterprise company. The Apex segment asks for 25% spread across at least 25 persons and an expected market value of at least £10 million. In an IPO the free float comes from the placing. In a direct listing it must exist beforehand, and provably so in the register. A company with five founders and a family office will not get there just by listing.
What changes on the administrative side
Because no new shares are placed, the work shifts from the offer to putting the existing shareholding in order:
- The register of members must be complete and current. Every shareholder, every class, every transfer has to be right, because trading starts from exactly that holding.
- The company must be a PLC. A Ltd may not offer its shares to the public, so admission is often preceded by converting the Ltd into a PLC.
- The shares must be capable of electronic settlement. AIM requires it expressly; in practice UK shares trade through the CREST electronic system.
- Existing shareholders holding paper certificates need a route into electronic holding. The government intends to abolish paper shares in UK companies traded on markets by the end of 2027 in any case.
- Articles, pre-emption rights and authorities to allot should be tailored to life after admission, even if nothing is issued on day one.
A tax detail that applies to both roads
Buying UK shares electronically normally triggers Stamp Duty Reserve Tax at 0.5%. For companies whose shares are newly admitted to a UK regulated market since 27 November 2025, that charge falls away for three years from listing. The relief turns on the first listing, not on whether it was an IPO or an introduction. On AIM, which is organised as a multilateral trading facility, the rule does not apply on its wording. The rest of the PLC's tax picture is under PLC tax.
Common questions
Is a direct listing cheaper than an IPO?
The costs of the placing fall away. Prospectus, advisers, audit and register work remain. How big the difference is depends very much on the case.
Does a direct listing work for small companies?
Only if the shares are already widely held. For young companies AIM and the Access segment of the Aquis Growth Market are the usual markets, but the free float rules apply there too.
Do direct listings exist outside the UK?
Yes, the idea is international. This page describes the UK rules for a PLC listing in London.
Sources: HMRC: Stamp Duty Reserve Tax, UK Listing Relief; FCA: PS25/9 New rules for the public offers and admissions to trading regime; FCA: PS25/9 (PDF, PRM sourcebook); FCA: PS24/6 (PDF, UK Listing Rules); legislation.gov.uk: POATRs 2024, regulation 15; London Stock Exchange: AIM Rules for Companies (August 2026); Aquis: Access Rulebook v1.2 (January 2026); Aquis: Apex Rulebook v1.1 (January 2026); GOV.UK: Government response to DEMAT Implementation Plan
