On 2 December 2021, the FCA published Policy Statement PS21/22 which sets out a series of changes to the Listing Rules to remove barriers to listing in London. The changes seek to address and build upon the proposals of the recent review by Lord Hill. The FCA believes that these changes will reduce barriers to companies listing in the UK and encourage private companies to consider listing at an earlier stage, while still retaining high standards for investors.
The key changes come into force on 3 December 2021 and are as follows:
Allowing a dual class share structures (DCSS) for premium-listed companies. The FCA states that this is intended to encourage innovative, often founder-led companies onto public markets sooner and so broaden the listed investment landscape for investors in the UK.
The Listing Rules currently restrict votes on matters relevant to premium listing to holders of premium listed shares only. The FCA has introduced an exception to this allowing premium listed companies to have dual classes of shares – with the second class of shares being unlisted shares with weighted voting rights – in certain limited circumstances.
The use of a DCSS is subject to a number of limitations including that weighted voting rights will only be available on a vote to remove the holder as a director and following a change of control in relation to a vote on any matter to operate as a strong deterrent to a takeover
Increasing the minimum market capitalisation (MMC) threshold for premium and standard listing companies (other than funds) from £700,000 to £30 million. This requirement only applies for new listings and does not apply as a continuing obligation for companies that are already listed. The FCA considers that raising the MMC will give investors greater trust and clarity about the types of company with shares admitted to different markets
Reducing the proportion of shares required to be in public hands (free float) to 10% from 25%
Minor modernisation of the Listing Rules, Disclosure Guidance and Transparency Rules, the Prospectus Regulation Rules and the FCA Glossary to simplify the FCA's rulebooks and to reflect changes in technology and market practice. The package of minor changes to modernise and streamline the FCA’s markets rule books will come into force on 10 January 2022.
Feedback on proposals set out in CP21/21 concerning the financial track record requirements of premium listed companies will be provided by the FCA in the first half of 2022.
In response to the Hill Review recommendation concerning the status of the different UK market segments, the FCA sought views in the consultation paper on four potential models for the UK listing regime going forward, possibly merging, or at least rebranding, the premium and standard segments, and amending the eligibility and continuing obligations accordingly. The FCA will publish a detailed consultation in the first half of 2022
