Trading private company shares: a guide to PISCES

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This guide is intended only as a general statement of the law and no action should be taken in reliance on it without specific legal advice.

What is PISCES?

The Private Intermittent Securities and Capital Exchange System, known as PISCES, is a new regulatory framework for the secondary trading of private company shares. It is designed to allow eligible private companies to create liquidity through regulated, intermittent share trading events, without becoming publicly listed.

For scaling companies, founders, early-stage investors and employee shareholders, PISCES offers a potential route to create liquidity without pursuing an immediate IPO or full exit. PISCES platforms also provide a way for companies to broaden access to investors, support employee share ownership and give qualifying individuals connected to the business an opportunity to participate in secondary share trading events.

Our guide to trading private company shares

This guide explains how the PISCES framework operates, including which companies may be eligible to trade on a PISCES platform, who can buy shares, and the degree of control companies may have over pricing, investor access and the structure of a trading event. It also considers how PISCES compares with listed and quoted public markets.

We also consider practical issues companies should consider before using a PISCES platform, including

core information disclosures
disclosure liability
settlement
stamp duty treatment
platform costs; and
what to expect when preparing to participate on a PISCES platform.

Download the guide for a detailed overview of PISCES and the legal, regulatory, tax and incentives issues that companies, shareholders and investors should consider before participating in a PISCES trading event.

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How Mishcon de Reya can help

Having been involved in the development of the PISCES framework since its inception, including by responding to Government consultations on the rules, we bring together expertise across corporate, capital markets, incentives and financial regulation to advise on the full range of issues that PISCES raises and the choices available to our clients.

Frequently asked questions

Which companies are likely to be suitable for a PISCES platform?

Save for as dictated by the PISCES operator's rules (if at all), there are no restrictions on the size of company whose shares can be traded on a PISCES Platform. That being said, trading on a PISCES platform is likely to suit scaling, mid-sized or later-stage private companies seeking secondary liquidity without an immediate IPO or exit.

How much control can a company have over a PISCES trading event?

Companies can set price parameters and may restrict access to certain investors, subject to the relevant rules and disclosure requirements.

Can a company restrict competitors from participating in a PISCES auction?

Yes, where this protects legitimate commercial interests, a company may be able to restrict competitors from participating in a trading event in relation to its shares.

What information must a company disclose before a PISCES trading event?

PISCES companies must provide core information, including financial information, share details, risks, material contracts and major shareholders.

What liability applies to PISCES company disclosures?

A negligence standard applies to core disclosures, with a higher recklessness or dishonesty standard for certain forward-looking and additional disclosures.

What should companies consider before applying to trade on a PISCES platform?

All companies considering trading on a PISCES should review their articles of association and (if applicable) any shareholders' or investment agreements, to consider if any amendments or consents are required to trade on a PISCES platform. Companies with existing share plans should review the plans and option agreements and it would be advisable to take advice on the potential tax implications and suggested before deciding to participate on a PISCES.

How does PISCES affect EMI and CSOP arrangements?

Companies may need to amend EMI and CSOP arrangements if PISCES auctions are to be included as exercise trigger events.

Does PISCES remove the need for an Employee Benefit Trust?

Not necessarily. EBTs may still be useful for holding shares, managing dilution, supporting leaver arrangements and planning future awards.

What tax risks can arise when preparing shares for PISCES trading?

Lifting transfer restrictions to allow PISCES trading may create tax risks under the restricted employment-related securities regime.