The FCA has published a consultation paper (CP21/21) in which it is seeking views on the listing regime and proposing targeted changes to the regime to remove rules that are seen as barriers to listing in London.
The consultation paper follows on from the Hill Review discussed in item 2 above.
The key proposals on which the FCA is now consulting are:
- Dual class share structures (DCSS) – The Listing Rules currently restrict votes on matters relevant to premium listing to holders of premium listed shares only. The FCA is proposing to introduce an exception to this, and allow premium listed companies to have dual classes of shares (with the second class of shares being unlisted shares with weighted voting rights) in certain limited circumstances. The use of a DCSS would be subject to a number of limitations, including the additional weighted voting rights only being available on a vote to remove the holder as a director and on any matter following a change of control (to operate as a strong deterrent to a takeover), only being available for five years from listing and only available to director-shareholders of the company (or the beneficiaries of such a director’s estate).
- Free float – The percentage of shares required to be held in public hands will be reduced from 25% to 10%, both at listing and as a continuing obligation.
- Track record – The FCA is not proposing at this stage to make any changes to the track-record requirements for companies looking to list but, as per the Hill Review recommendation, is seeking views on whether changes are needed to attract more high-growth companies.
- Minimum market capitalisation – The minimum market capitalisation for both premium and standard listed companies (other than funds) will be increased from £700,000 to £50 million. This requirement would only apply for new listings and would not apply as a continuing obligation for companies currently listed.
It is also proposing a number of minor changes to the Listing Rules, Disclosure Guidance and Transparency Rules and the Prospectus Regulation Rules, to simplify the rules and reflect current practices.
In response to one of the other Hill Review recommendations around the status of the different UK market segments, the consultation paper outlines four potential models for the UK listing regime going forward. It asks questions around possibly merging, or at least rebranding, the premium and standard segments, and amending the eligibility and continuing obligations accordingly.
The consultation closes on 14 September 2021 and the FCA expects to make the relevant rule changes by late 2021.
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