STSM041300 - Exemptions and reliefs: exemptions: growth market shares - recognised growth markets - how to qualify as a recognised growth market - the market capitalisation condition

A market can apply to be a recognised growth market if it is a recognised stock exchange or (with effect from 1 January 2024) a Financial Conduct Authority (FCA) regulated multilateral trading facility (MTF) and meets one of two conditions - see STSM041290.

The market capitalisation condition (section 99A(5)(a) FA 1986)

The condition is that a majority of companies trading on the market must be companies with market capitalisations of less than 拢450 million (since 1 January 2024, the previous limit was 拢170million).

A company鈥檚 market capitalisation is calculated by taking the average of the closing market capitalisations of the company on the last trading day of each calendar month (or part of a calendar month) in the qualifying period.

The 鈥榪ualifying period鈥� is the shorter of:

  1. the last three calendar years preceding the relevant time; or
  2. the period beginning with the day that the company is admitted to trading on the market and ending at the end of the last calendar year preceding the relevant time.

A company is disregarded in the calculation where it is admitted to trading on the market in the calendar year in which the relevant time falls.

The 鈥榬elevant time鈥� is any time that the market qualifies.

As the market capitalisation condition tests are backward looking (i.e., they are applied to past calendar years) a market must have had a company or companies admitted to trading on it in the calendar year prior to the year in which the condition is tested 鈥� so a brand new market will not be able to meet this condition until the second calendar year it has had companies admitted to trading on it.