The UK Financial Conduct Authority’s new listing regime came into force yesterday, aiming to allow a wider range of companies to issue shares on a UK exchange.
By removing ‘premium’ and ‘standard’ listing segments and bringing in a commercial companies category for equities shares, the FCA hopes to mitigate frictions to growth once companies are listed, ensure that investors have the information they need to make informed investment decisions, and boost growth on UK stock markets.
In the new rules, voting is no longer needed for significant or related party transactions, while enhanced voting rights have been given greater flexibility. Shareholder approval continued to be needed for key events, including reverse takeovers and the removal of shares from exchanges.
Although the rules allow for greater risk, the FCA has stated that it believes the changes will more accurately reflect the risk appetite needed to achieve economic growth. They also put the UK in closer alignment with international market standards.
When the rules were published in early July, executive director of markets and international at the FCA, Sarah Pritchard, said: “’Regulation is only part of the answer in helping the UK achieve sustainable growth. Other factors also play a significant role in influencing where a company decides to list. We’re committed to continually working together with all those who have a part to play in supporting a thriving UK capital market.”
Rachel Reeves, the recently-appointed chancellor of the exchequer, added: “These new rules represent a significant first step towards reinvigorating our capital markets, bringing the UK in line with international counterparts and ensuring we attract the most innovative companies to list here.”
Speaking to Global Trading, Stacey Parsons, managing director and head of fixed income at PrimaryBid, said: “These are welcome reforms. The FCA’s new listing rules represent a significant, competitive and welcome leap forward for the UK’s public equity markets, making it easier for companies to choose listing in the UK.
Parsons draws attention to two other initiatives the FCA is putting in place to strengthen UK capital markets: the replacement of the UK Prospectus Regulation with the Public Offers and Admissions to Trading Regulations (POATRs) and a consultation on proposals to operate a public offer platform.
Under POATRs, companies will be required to publish a prospectus when issuing securities to public markets – as current regulation decries – but now when raising further capital, outside of limited circumstances.
Through this change, the FCA aims to reduce the costs of further capital raising for companies and ensure that investors can access the information they need.
A public offer platform will allow companies to raise capital outside of public markets, including from retail investors, the FCA stated. The association added that the platforms would promote scale-up capital raising for smaller companies, while keeping investors informed of the key terms and risks of an investment.
Parsons affirmed: “Alongside the anticipated reforms to the public offers and prospectus regime, [the listing reforms] should be a very welcome shot in the arm for the UK’s public markets, and the culmination of over 4 years of work.”
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