Following on from our last article released on 22nd December 2023 (link at the end of this article), the FCA has today published the Final Rules for the new UK Listing Regime. These changes are the most significant changes to the UK Listing regime in over three decades.
The new UK Listing rules (UKLR), as they will be known, will come into force on 29 July 2024 and be published in a new UKLR sourcebook.
The main changes from the proposals set out in the FCA's consultation paper CP23/31 include:
- Disclosures in relation to significant transactions:
- Companies falling into the Commercial Companies (Equity Shares)
(ESCC) category will have increased flexibility regarding timing
and the content of transaction announcements in relation to
significant transactions, reducing the burden of having to release
a transaction announcement with prescribed content as soon as the
terms of such transaction are agreed. For example:
- transaction announcements in relation to acquisitions will not require audited financial information on the target or a statement regarding the fairness of the consideration. However, transaction announcements in relation to disposals will require financial disclosures on the target. Following the transaction announcement regarding signing, certain items may be disclosed as soon as possible after the information has been prepared or available to the company. After completion, companies will also be required to make a notification indicating that the transaction has taken place; and
- the FCA has introduced guidance setting out its expectations around disclosures for companies in "severe financial difficulty" (in compliance with the Market Abuse Regulation).
- Dual class share structures: institutional investors, as well as natural persons, will be permitted to hold weighted voting rights, subject to transfer restrictions and a 10-year expiry.
- Controlling shareholders: Companies falling into the ESCC category will still need to maintain their independence from controlling shareholders, but there will no longer be a requirement for a written relationship agreement. Instead, if a controlling shareholder proposes a shareholder resolution, the board will need to include an opinion statement in the circular on that resolution.
- Board declarations on appropriate systems and controls: confirmation that a company has appropriate systems and controls to ensure compliance with the Listing Rules will only need to be submitted on IPO and not on subsequent admission of securities of the same class already listed. The form of confirmation (i) has been modified to reflect that the obligations referred to in it are those of the applicant, despite being signed by a duly authorised member of the board, and (ii) is phrased to reflect Listing Principle 1 (i.e. that the applicant has taken reasonable steps to establish adequate procedures, systems, and controls).
- Shell companies/SPACs:
- Larger SPACs can elect to put in place sufficient investor protections in order to avoid a presumption of suspension.
- Non-SPAC shell companies would not be forced to adopt all of these measures.
- Shell companies/SPACs may extend the time limit for completion of a transaction by 12 months up to three times subject to shareholder approval, which can be extended for a further period of up to six months in certain circumstances.
The FCA will formally review the new listing regime in five years' time to assess the impacts on the market.
Applicants that have made complete submissions to the FCA for an eligibility review for listing of securities by 4:00pm on 11 July 2024 will be treated as an 'in-flight applicant' under the new rules.
Overall, the FCA's new UK listing regime simplifies and consolidates the previous premium and standard listing segments into the ESCC, creating a more flexible framework that accommodates a wider range of IPO candidates. It retains the regulatory framework for international secondary listings and GDR categories, maintaining the UK's appeal to global companies. The regime aims to foster a dynamic, competitive listing environment, enhancing the UK's status as a leading global financial centre by prioritising transparency, flexibility, and investor protection to support sustainable growth and innovation in the capital markets.
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