Listing regime

FCA proposals confirm radical reform of UK listing regime

On 20 December 2023 the Financial Conduct Authority (FCA) published Consultation Paper CP23/31 setting out detailed proposals for the reform of the UK listing regime. This follows on from the blueprint contained in its previous consultation (CP 23/10) published in May 2023.

The proposals confirm a radical overhaul of the current rules by the FCA with a marked shift towards a more disclosure-based framework, reflecting its underlying intention of encouraging a more diverse range of issuers to list on UK markets (and to do so at an earlier stage) whilst providing investors with sufficient information to be able to exercise stewardship and other shareholder rights so as to influence company behaviour.

On 7 March 2024, the FCA published an updated draft instrument which contains tranche two of the new UK Listing Rules (alongside the original tranche one drafting appended to CP23/31) with the new content including, amongst other things, the draft rules for the closed-ended funds, shell companies, secondary listing and GDR categories - the updated draft instrument supersedes the draft rules appended to CP23/31. At the same time, the FCA also published proposed consequential changes to other FCA Handbook sourcebooks including the DTRs.

For a discussion of the key requirements for the new equity shares in commercial companies (ESCC) category, some of the main changes from the position outlined in the previous consultation, and the transitional provisions the FCA intends to apply to existing premium listed commercial companies and standard listed share issuers see our separate briefing FCA proposals confirm radical reform of UK listing regime.

Key Listing Rules changes made during 2021

The FCA made a number of changes to the Listing Rules during 2021 (and which followed on from recommendations made in the Hill Review), including:

• Reducing the minimum free float threshold from 25% to 10%.
• Permitting dual class share structures to list on the premium segment provided they meet a range of specific requirements.
• Increasing minimum market capitalisation for share issuers on IPO to £30m (other than for LR15 funds where it remains at £700k).
• For SPACs that meet certain criteria, removing the presumption of suspension that otherwise applies to shell companies on the announcement of a reverse takeover. The criteria that must be met include raising a minimum of £100m on IPO, ring-fencing monies raised, completing an acquisition within 24 months (this can be extended to a maximum of 42 months in certain circumstances), obtaining shareholder approval for the reverse takeover and providing a redemption option to shareholders. For further information see our separate briefing FCA consults on enhanced investor protection measures for SPACs.

Links to key consultations/responses etc.

2024

FTSE Russell notice and summary and FAQs (March 2024) – intended to provide insight into provisional changes to the FTSE UK Index Series Ground Rules consequent to the ongoing review of the UK listing regime by the FCA

Updated draft UK Listing Rules instrument (March 2024) – this contains tranche two of the new UK Listing Rules (alongside the original tranche one drafting published with CP23/31) including, amongst other things, the draft rules for the closed-ended funds, shell companies, secondary listing and GDR categories. It supersedes the draft rules appended to CP23/31 and should be taken as the full and complete draft for consultation purposes.

Draft UK Listing Rules (consequential amendments) instrument (March 2024) – this sets out proposed consequential changes to other FCA Handbook sources, including the DTRs

2023

CP23/31: Primary Markets Effectiveness Review: Feedback to CP23/10 and detailed proposals for listing rules reforms (December 2023) – this consultation sets out the detailed proposals for reform of the UK listing regime together with draft rules for the new “equity shares in commercial companies” (ESCC) listing category

CP23/10 Primary Markets Effectiveness Review: Feedback to DP22/2 and proposed equity listing rule reforms (May 2023) – this consultation sets out the FCA’s proposals for reform of the London listing regime for equity shares of commercial companies

2022

DP22/2 Primary Markets Effectiveness Review: Feedback to the discussion of the purpose of the listing regime and further discussion (May 2022) – this set out for discussion a potential new single segment approach to UK listings of equity shares in commercial companies

2021

PS21/22 Primary Markets Effectiveness Review: Feedback and final changes to the Listing Rules (December 2021) – this included feedback and final rules in relation to the areas consulted on in CP21/21 (i.e. dual class share structures, minimum market capitalisation, free float and track record requirements) with the relevant changes coming into effect in December 2021

CP21/21 Primary Markets Effectiveness Review (July 2021) – this included a consultation on specific rule changes in relation to dual class share structures, minimum market capitalisation, free float and track record requirements as well as a broader discussion paper element in relation to the purpose and structure of the listing regime

PS21/10 Investor protection measures for special purpose acquisition companies: Changes to the Listing Rules (July 2021) – these changes came into effect in August 2021

CP21/10 Investor protection measures for special purpose acquisition companies: Proposed changes to the Listing Rules (April 2021)

UK Listing Review (Hill Review) (March 2021)