The FCA has provided updates on its expected approach to proposed reforms to the UK listing regime, including a new single listing segment.
On 29 March 2023, the FCA's Chief Executive, Nikhil Rathi, delivered a speech at the Global Investment Management Summit in London on the wider UK capital markets eco-system, including updates to the FCA's expected approach to reforms to the UK listing regime. This follows on from the proposals in the FCA's discussion paper published in May 2022 (DP22/2). Revised proposals from the FCA are expected shortly this year.
The speech on 29 March 2023 provided further updates on the FCA's expected approach to proposed reforms to the UK listing regime, as well as other areas relevant to wider reform of the UK capital markets, including asset management, ESG labelling and the role of UK pension funds.
These updates follow further consideration of the proposals published by the FCA in discussion paper DP22/2 in May 2022 and feedback received by the FCA.
The FCA has indicated it now expects to propose:
- replacing the current standard and premium listing segments for shares in commercial companies with a single listing category with one set of requirements;
- removing the listing eligibility requirement for a three-year financial track record;
- removing compulsory shareholder votes for large and related party transactions, whilst maintaining a disclosure regime;
- allowing a more permissive approach to dual class share structures;
- allowing experienced investors further flexibility to form their own judgement in making investment decisions based on issuers' disclosures;
- retaining a streamlined sponsor regime and single set of Listing Principles; and
- retaining rules to protect shareholders from the solvent cancellation of a listing without takeover offer or approval by a super majority of investors.
Whilst the updates are relatively high-level and full details of the revised proposals are yet to be published, they provide a useful insight into the FCA's latest thinking, including following the feedback received on DP22/2.
The updates also suggest, in part, an evolution in certain areas from the proposals published in DP22/2, particularly in respect of the removal of shareholder votes for large and related party transactions.
The speech also referred to the FCA's intention to work closely with the ongoing independent review of financial services investment research established by HM Treasury in March 2023. This will examine the link between research and the attractiveness of the UK capital markets.
The FCA has acknowledged the need for further engagement with market participants on the detail of the proposals and noted their expectation of publishing a further "blueprint" shortly.
We expect this to take the form of a further consultation paper by the FCA, including a statement on feedback received, and potentially including new FCA Handbook rules in draft.
The FCA also noted that reform of the UK listing regime is part of a wider context of ongoing debate and action needed to determine a UK capital market eco-system fit for the future. As such, proposals in other areas remain expected in the near and medium term.
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