Proposals dramatically reduce the regulatory burden on listed companies.

By James Inness, Anna Ngo, and Johannes Poon

On 3 May 2023, the FCA published a consultation paper CP23/10 which sets out a blueprint for changes to the UK listing regime. The key reform proposed is that the existing premium and standard listing segments would be replaced with a single segment for commercial companies.

What specifically would change for premium listed companies?

• IPO eligibility:
  • The removal of the requirement for a three-year financial and revenue earning track record and a “clean” working capital statement
  • Simplified rules requiring that a company has an independent business and has operational control over its main activities
• Class 1 and related party transactions (RPTs):
  • The removal of compulsory shareholder votes and shareholder circulars for significant transactions
  • The removal of compulsory shareholder votes and shareholder circulars for RPTs
• Controlling shareholders:
  • Replace existing rules requiring a relationship agreement between a listed company and its controlling shareholder with a comply-or-explain approach in which the absence of a relationship agreement would require specific disclosures
  • Dual class share structures would be broadly permitted subject to limited conditions
• Other:
  • A single set of Listing Principles and related provisions
  • The potential merger of the rules for Sovereign Controlled Commercial Companies into the single equity category

What would be retained?

• Sponsor regime: sponsors only required at IPO and for certain disclosure or reporting obligations
• Discounted share offers: discount limits on non-pre-emptive share offers
• Investment companies: Separate listing categories and rules for equity shares issued by investment vehicles, OEICs, SPACs, and potentially other investment companies

Next steps

The FCA’s deadline for responses to the consultation paper is 28 June 2023. The FCA aims to issue a further consultation with the proposed specific revisions to the listing rules this autumn.

Below is a more detailed overview of the single equity category proposal: