First set of draft amended guidance notes for new UK Listing Rules published

The Financial Conduct Authority (FCA) has published Primary Market Bulletin 48 (PMB 48), which includes a consultation on the first set of draft new and amended guidance notes to reflect the rule changes it anticipates making over the summer as part of its overhaul of the UK listing regime.

As well as describing in summary the amendments to be made to its guidance (discussed further below), in PMB 48 the FCA says:

• Timing – it expects to seek board approval of the final new UK Listing Rules (UKLR) in June or July 2024 and publish them shortly thereafter. In CP 23/31 the FCA said it intends that the new rules will come into force two weeks after they are published.
• Mapping of companies to the new listing categories – as it said in CP 23/31, the FCA will contact all listed companies before the UKLR come into force to explain the category it expects their securities to be "mapped" to. The FCA says it expects such notifications to be sent out from mid-May. Listed companies who believe they have been allocated to the wrong category will have four weeks to revert to the FCA.
• Transitional provisions – whilst premium listed companies will automatically go into the new “equity shares in commercial companies” (ESCC) category, standard listed commercial companies will move into the transition category or overseas listing category. The FCA has published a new draft guidance note on a modified transfer process from the transition or overseas listing categories to the new ESCC category, focussing in particular on the sponsor role. A sponsor will be required to make a declaration to the FCA that it has not identified any adverse information that would lead it to conclude that the listed company would not be able to comply with its obligations under the UKLR as part of the process.

For more information on the radical re-set of the UK listing regime, read our blog posts here (on CP 23/31 published in December 2023, containing the first tranche of draft rules) and here (on the second tranche of draft rules published in March 2024). To read more on the new “ESCC Category” our snapshot is here.

Amended guidance for listed companies

The FCA is adopting a phased approach to consulting on changes to its guidance given the volume of changes required for the UKLR. In PMB 48 it is focussing on the technical notes that it considers are the most important, or most frequently used by market participants. It will consult on further technical and procedural notes in future editions of PMB.

It is proposing material changes to the following notes:

• The independent business requirements for companies applying for premium listing – interpretation of LR 6.4, LR 6.5 and LR 6.6 (Primary Market/TN/103.1): this guidance is being amended to reflect that going forwards it will only be relevant for companies with a controlling shareholder as under the UKLR independent business will only be a relevant eligibility requirement and continuing obligation for a company with a controlling shareholder;
• Classification tests (Primary Market/TN/302.2): the FCA highlights that a listed company will need to appoint a sponsor for a significant transaction if it needs to engage with the FCA for guidance on, or a waiver or modification of, the class tests or other significant transaction rules (although a sponsor is no longer needed under the UKLR for a significant transaction of itself);
• Pro forma financial information (Primary Market/TN/633.2): listed companies are now directed to the UKLR in relation to pro formas in significant transaction announcements – a light-touch pro-forma. The more detailed requirements of the UK Prospectus Regulation on pro formas remain relevant when a prospectus is being prepared.

It is also proposing amendments that are not material and reflect the new ESCC category, and update or delete redundant rule references, to the following notes:

• Compliance with the Listing Principles and Premium Listing Principles (Primary Market/TN/203.4)
• Amendments to the terms of a transaction (Primary Market /TN/304.1)
• Aggregating transactions (Primary Market/TN/307.1)
• Related party transactions – Modified requirements for smaller related party transactions (Primary Market /TN/308.3)
• Shareholder votes in relation to hypothetical transactions (Primary Market/TN/312.1)
• Working capital statements – basis of preparation (Primary Market/TN/320.2)
• Profit forecasts and estimates (Primary Market/TN/340.3)

• Cash shells and special purpose acquisition companies (SPACs) (Primary Market/TN/420.3)

Forms and checklists

The FCA says it will publish the updated forms and checklists on its website when it publishes the final rules.

It has included one new form in PMB 48 –  the new board confirmation form on compliance with continuing obligations and the Listing Principles. This form will need to be submitted with any new listing application. It says it is not formally consulting on the content of the form, but is happy to receive feedback.

Removal of guidance for listed companies

The FCA is deleting a number of technical notes as they relate to rules or requirements which are not proposed to be carried over to the UKLR, including on the contents of an RIS announcement on a related party transaction and the guidance notes for specialist companies.

Amended guidance on the sponsor regime

The FCA is also consulting on amendments to its existing technical notes on the sponsor regime, as well as adding one new technical note on the sponsor role on transition (discussed above).

It is proposing to amend the following notes to seek to clarify that third party expert reports are not required in all circumstances. If reports are prepared, reliance on them by a sponsor without challenge (where appropriate) will not be a proper discharge of a sponsor's role:

• The sponsor’s role on working capital confirmations (FCA/TN/704.3)
• Sponsors: uncertain market conditions (FCA/TN/705.2)
• Sponsors' obligations on financial position and prospects procedures (FCA/TN/708.3)
• Sponsors – Guidance on the competence requirements set out under UKLR 24.4.12R(2)(b) (FCA/TN/714.4)
• Sponsors' obligations on established procedures (FCA/TN/719.1)
• Sponsors' obligations on no adverse impact (FCA/720.1)

The FCA is proposing amendments that are not material and reflect the new ESCC category and update or delete redundant rule references, to the following notes:

• Sponsors who are part of an investment management group (FCA/TN/707.1)
• Sponsor transactions – Adequacy of resourcing (FCA/TN/709.3)
• Sponsor services: Principles for Sponsors  (FCA/TN/710.1)
• Sponsor notifications (FCA/TN/711.1)
• Additional powers to supervise and discipline sponsors (FCA/TN/712.2)
• Sponsors – Practical implications of competence requirements for sponsors and applicants (FCA/TN/715.2)
• Sponsors' duty regarding directors of listed companies (FCA/TN/718.1)

It has also finalised amendments to three technical notes relating to sponsor competence – see item 3 below.

Comments on the new and amended guidance notes should be submitted by email by 26 May 2024.