The Financial Conduct Authority is seeking further views on the structure of the UK listing regime.
In March 2021 the Government published the outcome of the Review of the UK listing regime undertaken by Lord Hill. It made a number of recommendations to seek to improve the attractiveness of the UK listing regime. Certain of the Hill recommendations (e.g. reduction of free float requirements, increase in minimum market cap, dual class share structures and SPAC rule changes) have already been implemented.
In July 2021, in response to one of the Hill Review recommendations concerning the status of the different UK market segments, the FCA sought views on potential future models for the UK listing regime. Following feedback, the FCA has now published a discussion paper (DP22/2). It considers whether the current premium and standard segments should be collapsed into a single "UK Listing" segment with a single set of eligibility criteria and mandatory and supplementary (optional) continuing obligations. The FCA proposes that the core mandatory continuing obligations would consist of requirements focusing on transparency and shareholder protection where their interests may conflict with those of management or a significant shareholder. The supplementary continuing obligations would comprise those obligations providing shareholders with an enhanced role in holding the company to account on an ongoing basis. If a company subsequently wants to move in or out of the regime at a later date, it will require shareholder approval.
The FCA contemplates a shareholder vote of each existing premium listed company to determine whether compliance with the supplementary continuing obligations is appropriate for that company.
As part of that new single segment regime the FCA contemplates a series of key changes:
Class 1 threshold – whether the class 1 transaction regime threshold should be raised from its current 25% level.
Eligibility requirements – the FCA is considering removing the current financial eligibility criteria for companies seeking admission to listing, which include:
3 year revenue earning track record
3 years' of audited historical financial information
'clean’ or unqualified working capital statement.
Instead, the new regime would be based upon disclosure, allowing investors to decide whether to invest based on information in the prospectus concerning the quality of the issuer.
Listing Principles – whether the Premium Listing Principles should be extended to apply to all single segment companies.
Dual class share structure companies – whether DCSS companies should be permitted in the single segment.
Sponsor regime – whether the sponsor regime should generally remain in its current form but expanded to include all listed companies in the single segment.
The discussion period closes on 28 July 2022 to be followed by further a discussion paper or specific proposals.
