Britain unveils biggest shake-up in listing rules in 30 years

LONDON – Britain’s markets watchdog on July 11 set out final rules for the biggest shake-up in how companies list on the London Stock Exchange (LSE) in three decades as it seeks to compete harder with New York and the European Union post-Brexit.

The Financial Conduct Authority (FCA) said the rules are largely unchanged from proposals made in December 2023, which divided opinion.

They merge the current two-tier standard and more onerous premium listing segments from July 29, a very short period as firms usually have many months to prepare.

The rules aim to attract a wider range of listings by reducing red tape, and placing the onus on companies to decide what information they should disclose to potential investors.

They also remove a requirement for companies to seek a shareholder vote on significant transactions, with the exception of reverse takeovers and any cancellation of a listing.

Britain’s Finance Ministry had requested the changes to help boost London’s competitiveness as a global financial centre, as Amsterdam, Paris and elsewhere in the EU – which has already eased its listings rules – compete with London due to Brexit, which took effect in January 2021.

Britain had also failed to persuade UK chip designer Arm Holdings to list in London rather than New York.

Fast-fashion retailer Shein, meanwhile, has begun the process for an initial public offering (IPO) in London.

“These new rules represent a significant first step towards reinvigorating our capital markets, bringing the UK in line with international counterparts and ensuring we attract the most innovative companies to list here,” said Ms Rachel Reeves, Britain’s finance minister in the new Labour government elected last week.

Founders or directors of a company can have dual or enhanced voting rights for an unlimited period, a step that aims to attract more growth companies whose founders want to retain control after a listing.

The FCA has also decided to allow pre-IPO institutional investors to have enhanced voting rights for up to 10 years.

The LSE has said its listings pipeline is building up in anticipation of the reforms.

LSE chief executive Julia Hoggett said the change will ensure that UK-listed companies benefit from “a listing regime that better supports their growth ambitions, increases investment opportunities for UK investors and supports the UK economy”.

The FCA, however, has said easing rules alone will not be enough to make companies list in London, and that relying more on companies to make disclosures brings risks, echoing concerns from shareholder groups about standards being weakened. REUTERS