Regime Change – Final UK Listing Rules Published

The FCA originally consulted on the proposed changes back in May 2023 and with a further consultation issued in December 2023 setting out more detailed proposals (please see our previous article on this: FCA reaches another key milestone in implementing substantive changes to the UK Listing Regime).

The final changes to the Listing Rules as set out in our previous note have been retained other than a couple of areas of divergence relating to the timing and content of disclosures for significant transactions, permitting institutional investors to hold enhanced voting rights and retaining the need for companies to be independent of their controlling shareholders.

Details of the rule changes are set out in full in the Policy Statement, which can be found here: (PS24/6: Primary Markets Effectiveness Review: Feedback to CP23/31 and final UK Listing Rules (fca.org.uk)

In summary, the key changes being enacted are as follows:

New Listing Categories

The existing standard segment has now been closed to new applicants with effect from 4pm today and a new single category for commercial company equity listings has been introduced in order to simplify the rules to promote UK markets.

International Secondary Listing Category

Non-UK incorporated companies with more than one listing where their ‘primary’ listing is on a non-UK market will be eligible to apply to a new International Secondary Listing Category. This category will replicate the current standard listing rules with targeted ongoing/ continuing provisions tailored to ‘secondary’ listing.

Companies will be able to apply their home listing corporate governance code, and will not need to adopt the UK Corporate Governance Code and they won’t be subject to the new rules on substantial and related party transactions.

Dual/multiple Classes of Shares

Issuers are permitted to have dual/multiple classes of shares in issue at the time of admission. Enhanced voting rights must only be held by natural persons without a time-based sunset clause. In a change from the previous consultation, pre-IPO investors that are legal persons may also now hold enhanced voting rights, subject to a maximum 10 year period after which enhanced rights should expire.

Disclosure Based Approach

A move towards a more disclosure based regime means that there will no longer be a requirement for shareholder approval for significant transaction ≥25% in class tests or related party transactions, but rather there will be some specific content requirements for announcements of such transactions. Reverse takeovers will still require an FCA approved circular and shareholder approval.

Controlling Shareholders

In another divergence from the rules, existing requirements for an issuer to ensure its independence from controlling shareholders has been retained. Guidance on factors indicating independence has been provided, although there will be no requirement for a controlling shareholder agreement.

Sponsor Regime

Sponsor regime is being changed to reduce the role and need for sponsor involvement to be limited to further issuance applications requirement prospectus, fair and reasonable opinions for related party transactions or, where issuers need guidance or consents from the FCA.

Our view

This is the first step in the biggest shake-up of the UK listing regime for 30 years and, after a challenging couple of years for our markets, is a positive move towards making the UK a more appealing listing destination. In particular, the new International Secondary Listing category is a clear sign that London welcomes overseas companies already listed elsewhere to tap into the UK’s investor base without having to follow excessive additional disclosure obligations. We welcome the changes and are optimistic that the markets will reap the rewards.