The Financial Conduct Authority (FCA) has published the final form of its new listing rules, named the UK Listing Rules, and has confirmed that they will be implemented on 29 July 2024.
The new rules have had a mixed reaction, with some pension funds for instance voicing their disapproval. The rules appear though to have the support of the new Labour government with the Chancellor of the Exchequer, Rachel Reeves, stating: "These new rules represent a significant first step towards reinvigorating our capital markets, bringing the UK in line with international counterparts and ensuring we attract the most innovative companies to list here."
By implementing the new rules, the FCA's aim is to encourage companies to choose a UK listing by streamlining the existing rules and creating a new Commercial Companies category for equity shares in place of the Premium List, as well as creating other categories, including those for shell companies, open-ended investment companies and closed-ended investment companies.
While the requirements for a minimum market capitalisation of £30 million on admission and 10% of shares to be in public hands remain, ways in which the UK Listing Rules are more flexible for the Commercial Companies category include: no listing requirements for historical financial information, a revenue track record or a clean working capital statement, although the prospectus rules will still require such disclosure; no requirement for a controlling shareholder agreement; and rules for announcing, but no requirement for shareholder approval for, significant transactions and related party transactions, with the latter requiring in certain circumstances a sponsor fair and reasonable opinion and board approval.
Companies currently on the Standard List will migrate to the Transition category, and be subject to equivalent rules, unless they are eligible for one of the shell companies, international commercial companies secondary listing, or non-equity shares and non-voting equity shares categories.
Companies applying to be admitted to the Standard List that made a complete submission to the FCA for an eligibility review for listing by 4:00pm on 11 July 2024 and which are not admitted to listing prior to 29 July 2024 will be eligible to be admitted to the Transition category provided admission takes place prior to 29 July 2025. The Transition category will otherwise be closed to new applicants.
There will be changes to the sponsor regime, with modified criteria for qualifying as a sponsor and fewer requirements for sponsor involvement; although sponsor involvement will be required for applications to be admitted to, and reverse takeovers on, the Commercial Companies, shell companies and closed-ended investment funds categories.
The FCA has stated that the changes to the existing rules are designed to remove frictions to growth once companies are listed: removing requirements for shareholder approval while continuing to place an emphasis on disclosure that puts information in the hands of investors to inform their investment decisions.
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