The exchange introduced the measure on Monday as it believes investors value third party due diligence and research for its independent view of a company’s potential and/or actual performance; valuation estimates; and analysis of financials, operations, and management.
Due diligence and commercial due diligence remain compulsory elements of listing or joining the GSX. However, under the new measures, member firms can choose to work with an approved third party to provide commercial due diligence.
GSX said: “This latest enhancement, in creating a high quality pan-European exchange that mitigates any impact of Brexit, underscores GSX’s commitment to educate investors and issuers on the importance of making transparency core to their public strategy.”
Nick Cowan, managing director of the stock exchange, said: “GSX’s values are based around reputation, regulation, and speed to market. It is standard practice for our listing members to carry out financial, legal, and controller due diligence on all applications, nevertheless, we wanted to provide additional clarity on the commercial aspects.
“Our GSX Procedures Manual introduces commercial due diligence as a standard element of the listing process, and these new arrangements offer our listing members two trusted sources of commercial due diligence, providing investors with a higher level of assurance and increasing GSX’s speed to market.”
Other jurisdictions will follow
Agreements to provide third part due diligence were reached with two research firms with expertise in analysing the commercial risks and opportunities in business cases: ACF Equity Research and Hardman & Co.
Christopher Nicholson, ACF managing director, believes that other jurisdictions will follow GSX’s lead.
He said: “In today’s globalised economy, it’s vital that smaller and mid-size cap companies are able to show that they are just as transparent and have exposed themselves to an appropriate level of third party appraisal as have their much large competitors in order to attract capital and maintain investor interest.”