Today the FCA has published the final version of its new listing rules and confirmed that the revised rulebook will take effect on 29 July 2024.
The changes have been a long time coming: what do you really need to know?
- Single listing category for commercial companies
The new regime marks the end of the current two-tier listing structure. Going forward there will be a new "commercial companies" category for equity share listings and existing premium listed issuers will automatically be "mapped" to this category. The new rules represent a relaxation of standards for existing premium-listed companies but a step up as compared with a standard listing. Existing standard-listed companies will be mapped to a transaction category which will be closed to new entrants.
- No financial track record or historical financial information
In a move towards a more disclosure-based regime, the FCA has removed its long-standing eligibility requirements for a three-year track record, historical financial statements and a "clean" or unqualified working capital statement. The FCA expects that disclosure in relation to financial information will continue to be required in the prospectus, including specific provisions for issuers with complex financial histories and requirements for working capital statements.
- No shareholder vote or circular for Class 1 transactions
The requirements for a prior shareholder vote and circular for Class 1 transactions have been removed, again in favour of a disclosure-based regime. This is a key change intended to make it easier for listed companies to engage in competitive M&A. However, it is important to note that the announcement required for significant transactions under the new regime will need to include much of the contents of a current Class 1 circular. Class 1 transactions are renamed "significant transactions" and the concept of a "Class 2" transaction has been removed. Reverse takeovers still require a shareholder vote.
- More flexible related party regime
There is no longer a requirement for a shareholder vote to approve a related party transaction. Going forward, a company entering into a related party transaction meeting the 5% threshold on class tests will require board approval of the transaction and an announcement which contains a "fair and reasonable" statement.
- Changes to sponsor role
The role on IPO is largely the same, although sponsors no longer have to assess whether an applicant meets the historical financial information, three-year financial track record or clean working capital statement requirements (as these eligibility requirements have been removed). Post-IPO the sponsor's role is more targeted: notably, sponsors are required for significant further issues, related party transactions and reverse takeovers.
- Also be aware...
As well as the substantive changes, issuers and sponsors will need to familiarise themselves with revised terminology and new chapter and rule references in the FCA's revised UK Listing Rules Sourcebook, even for elements of the regime which will remain the same. This will necessitate changes in all documents referencing the listing rules, even those which do not contain substantive descriptions of the rules.
As you will be aware, changes to the prospectus regime are yet to come. We expect to receive further details of these later this year, with the new regime taking effect in 2025.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.