FCA overhauls listing rules in final reforms

July 12th, 2024

The Financial Conduct Authority (FCA) has updated the UK’s listing regime to streamline the rules, hoping to boost growth and innovation.

The rules, which will apply from 29 July 2024, remove the need for votes on significant or related party transactions, but shareholder approval for key events, such as reverse takeovers and decisions to take the company’s shares off an exchange, is still required.

It also introduced a single listing category, the ‘commercial companies’ category, to replace the current ‘premium’ and ‘standard’ listing segments.

In its summary, the FCA said that following the consultation on the proposed rules there had been a “significant split” in views on some of the rules for commercial companies with listed equity shares.

It noted there were differing opinions on the overall strategic approach of moving away from ex ante controls to a disclosure-based philosophy and system which it said “puts information in the hands of investors so they can decide whether to invest”.

The regulator said that after considering the responses, it had opted to maintain its approach of moving to a disclosure-based philosophy.

This has been criticised by those hoping to see further investor protections introduced.

Caroline Escott, acting head of sustainable ownership at Railpen, said: “We are deeply disappointed with the final UK listing rules and feel an opportunity has been lost to truly make UK capital markets an environment where all the parties necessary to creating long-term value can cooperate and have a voice.”

David Robinson, partner at law firm Fladgate, said: “Lighter regulation, including more flexible dual class share structures aimed at attracting high-growth companies, will be welcomed by many issuers and sell-side advisers but the shift in emphasis to a more disclosure-based approach undoubtedly carries risk for investors.”

However, Robinson also highlighted that many investors "accept that risk when investing in companies listed outside the UK, so to some extent the reforms simply level the playing field”.

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