The UK’s Financial Conduct Authority has published a paper on potential reforms on how companies list in the UK, with the aim to attract more “high quality, growth companies and give investors greater opportunities.”
In its paper, the FCA discusses how it can make the listing regime, the rules companies must follow to be allowed to list their shares in the UK, more effective, easier to understand and more competitive.
One of its suggestions involves companies wishing to list in the UK would no longer need to choose between two different segments with different branding and standards. Instead, all listed companies would need to meet one set of criteria and could then choose to opt into a further set of obligations. These would be focused on enhancing shareholder engagement and be overseen by the FCA.
Feedback on a previous discussion paper indicated many were keen to keep these additional safeguards. Companies and their shareholders would decide for themselves if these additional obligations were right for them.
FCA director of market oversight Clare Cole said, “The London market is trusted the world over by companies looking to raise capital and those wishing to invest in them. That trust is created by strong standards and a world-leading concentration of buyers, sellers and the advisers who support them.
“The rules for companies who want to list here have not changed since the 1980s. Now is a good time to have an open conversation to make sure our rules are fit for the future, so we have a more accessible, competitive and growing market that is attractive to a diverse range of companies.”
Last year, the FCA improved the listing regime by lowering free float levels, allowing certain forms of dual class share structures and introducing digital financial reporting. These changes, it claims, promote broader access to listings for a wider range of companies at an earlier development stage. It also helps investors leverage data to improve decision-making.
Earlier this week, the FCA received new powers to swiftly cancel or change what regulated activities companies are permitted to do. It claimed it will provide a firm with two warnings if it believes they are not using their regulatory permission. If relevant action is not taken, the FCA will be able to cancel or change the permission.
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