FCA proposes to simplify rules to encourage firms to list in UK

The FCA has proposed to “reform and streamline” the listing rules in the UK to help attract a wider range of companies, encourage competition and improve choice for investors.

The FCA wants to 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”.

While the UK has been Europe’s biggest financial hub for many years, listings in the UK have reduced by 40% since 2008, according to The UK Listing Review.

The FCA said the decision by a firm to list is based on many more factors than regulation alone, such as taxation and the availability of capital.

However, the listing regime in the UK has been seen by some issuers and advisers as too complicated and onerous.

It added this is why it is proposing “significant” changes to the listing rulebook, including replacing its existing ‘standard’ and ‘premium’ listing segments with a single category for equity shares in commercial companies.

Under the proposals requirements would be focussed on transparency for investors to support decision making and sponsor oversight at the listing gateway to ensure companies can meet the FCA’s standards.

It also confirmed a single equity category would remove eligibility requirements that can deter early-stage companies, be more permissive on dual class share structures, and remove mandatory shareholder votes on transactions such as acquisitions to reduce frictions to companies pursuing their business strategies.

It concluded the proposed changes aim to provide a “simpler and more accessible” UK listing regime for companies, “improving the attractiveness of listing in the UK and providing a wider range of investment opportunities for investors”.

Nikhil Rathi, chief executive of the FCA, said: “London is a major international market with a deservedly good reputation globally among companies aiming to raise capital.Our proposed reforms would significantly rebalance the burden of regulation to the benefit of listed companies and investors who are willing to set their own risk appetite and terms of engagement.

“While regulation plays an important part, a company’s decision on whether, and where to list, is influenced by many factors so substantive change will require a concerted effort from government and industry as well.We want to encourage more companies to list and grow in the UK, versus other highly competitive international markets.”