FCA listing rules overhaul reduces regulatory burden on companies

New listing rules from UK regulator the Financial Conduct Authority (FCA) provide a much-needed boost to the UK capital markets, reducing the regulatory burden on listed companies with a new permissive disclosure-based approach, an expert has said.

The FCA recently announced the significant overhaul, with aims of boosting growth and innovation across the UK markets. The move is designed to make the UK a more attractive destination for companies looking to list their shares.

Julian Stanier, corporate finance expert at Pinsent Masons, said: “The new regime should enable a more diverse range of companies to access the UK capital markets and benefit from its global reach and reputation.”

The new rules (556 pages /4.7 MB), which come into effect on 29 July, introduce a simplified listings regime with a single category and streamlined eligibility criteria.

One of the main changes is removal of separate ‘premium’ and ‘standard’ listing segments in favour of a single ‘commercial’ category. Previously, ‘premium’ listed companies were subject to more stringent governance and reporting requirements. This amendment is aimed at encouraging innovation, broadening the investment landscape for UK investors.

The overhaul will see the need for votes on significant or related party transactions removed. Listed companies looking to grow their businesses through acquisitions will be able to compete on a level playing field with unlisted corporate buyers and PE houses ie there is no need to delay completion of the deal pending receipt of shareholder approval. However, shareholder approval for major events, such as reverse takeovers and decisions to delist, is still a requirement. The aim here is to give companies more flexibility while ensuring that investors retain a say in major corporate decisions. Companies will still be required to share important information, such as annual reports, to investors.

The new rules follow several years of discussion and consultation between various stakeholders in the UK financial services sector. The update is expected to have a significant impact on the UK stock markets, making them more competitive on the global stage.

The FCA has cautioned that the new rules mean lower barriers to listing, in turn potentially allowing for riskier investments. It means that in depth investor research is advised to ensure informed decisions are made.