Second tranche of draft UK Listing Rules published

The Financial Conduct Authority (FCA) has published a full draft of the new UK Listing Rules as part of its overhaul of the UK listing regime. The draft instrument includes the second tranche of rules that were referenced, but not set out, in its consultation paper CP 23/31.

CP 23/31 contained the FCA's proposals for a radical reset of the UK listing regime, with the introduction of a new single segment, the new “equity shares (commercial companies)” (ESCC) category, to replace the current premium and standard segments, with just one set of continuing obligations for normal commercial companies. For further information on the proposals, see our blog post here and our snapshot on ESCC Category here.

The draft instrument, which supersedes the draft rules contained in Appendix 1 of CP 23/31 contains the remaining draft rules on the areas that were not covered by CP 23/31, including:

• The Listing Principles (UKLR 2) – There will be a single set of Listing Principles for all listed companies. The new Listing Principles will combine the current Listing Principles and Premium Listing Principles, with the exception of current Premium Listing Principles 3 and 4, which will be moved to the admission requirements for the ESCC category (in UKLR 5). There is also additional guidance on Listing Principle 1 (establish and maintain adequate procedures, systems and controls to enable an issuer to comply with its obligations) and Listing Principle 2 (deal with the FCA in an open and co-operative manner).
• Transition category (UKLR 22) – There will be a transition category for existing standard listed commercial companies (unless they are eligible for admission to a different category, such as the category for international commercial companies with a secondary listing). Companies in this category will have to comply with, among other things, DTR 4 (Periodic Financial Reporting), DTR 5 (Vote holder and Issuer Notification Rules), DTR 6 (Access to Information), DTR 7.2 (Corporate governance) and DTR 7.3 (Related party transactions). They will also have to include in their annual reports statements on climate-related financial disclosures and board diversity.
• International commercial companies seeking a secondary listing (UKLR 14) – This category is for overseas companies that have a "qualifying home listing", that is their equity shares are admitted to trading on an overseas regulated, regularly operated, recognised open market. Companies in this category will also have to comply with, among other things, DTR 4, DTR 5, DTR 6, DTR 7.2 and DTR 7.3, and include in their annual reports statements on climate-related financial disclosures and board diversity.

The instrument also contains draft rules for other categories of issuers, including closed-ended investment funds (UKLR 11) and open-ended investment companies (UKLR 12), as well as areas that apply to issuers in all categories such as the suspension, cancellation and restoration of listing.

Whilst the consultation on CP 23/31 closes on 22 March 2024, the FCA says that it will accept comments on the additional second tranche of rules until 2 April 2024. The FCA has not indicated that the timetable for implementation of the rules has changed. In CP 23/31, it said that it expects to publish the final rules at the start of the second half of 2024, with them coming into force two weeks later.