The FCA has published further detailed proposals for a significantly reformed UK listing regime, including the first tranche of its proposed new Listing Rules.
The proposals mark another important milestone in the ongoing project to modernise and simplify the UK listing framework and bring welcome additional flexibility for both issuers and investors. A second tranche of proposed new Listing Rules will be published in Q1 2024, with the aim to publish the final rules at the start of the second half of 2024.
The new UK listing regime
The latest consultation paper (CP23/31) broadly maintains the approach set out in the FCA's previous consultation paper published in May 2023 (CP23/10), but also includes the first tranche of draft rules for a new UK Listing Rules sourcebook.
The key proposals previously announced in CP23/10 – including creating a single listing category for equity shares in commercial companies, removing eligibility rules requiring a three-year and revenue-generating financial track record and removing mandatory shareholder circulars and votes for Class 1 and related party transactions – remain broadly unchanged. The overall philosophy proposed in CP23/10 of moving to a more disclosure-based regime also remains an important guiding principle.
The consultation paper provides further detail and certain updates to the previous proposals, including:
- an enhanced market notifications regime for significant transactions at ≥25% (which will not require a working capital statement or re-stated historical financial information);
- the retention of the controlling shareholder regime and written controlling shareholder agreements;
- market notification and a sponsor fair and reasonable opinion for related party transactions at ≥5%;
- a wider scope of persons able to hold dual class share structures (including natural persons who are shareholders and employees) and the removal of any mandatory “sunset” period;
- a new international secondary listing category for non-UK incorporated companies and a closed “transition” category for existing Standard listed issuers that require time to adapt before they are able to comply with and move to the new single commercial company category (based on the current rules for Standard listed shares); and
- a more limited sponsor regime in broadly the form previously proposed – the FCA will also seek to re-calibrate the supervisory and compliance expectations for sponsors.
The proposals and draft rules remain subject to further consultation and the FCA welcomes further engagement and feedback over the coming months.
Next steps
The consultation period on the new proposals will run until 22 March 2024. A second tranche of proposed Listing Rules will be published in Q1 2024, with the aim to publish the final rules at the start of the second half of 2024. Certain proposals on changes to the sponsor competence requirements are proposed to be implemented ahead of the wider reforms and, in respect of these, the FCA is seeking comments by the earlier date of 16 February 2024.
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