Significant changes to UK’s listing rules

In order to make the UK’s financial markets more accessible, efficient and appealing the Financial Conduct Authority (FCA) has introduced significant changes to the UK’s listing rules.

The new rules come into effect on 29 July 2024, and focus on making financial preparation implications easier for companies. The driver for this being the FCA’s objectives of improving the attractiveness to investors of the UK equity capital markets, following an extensive market consultation which looked at balancing an increased risk tolerance with a need for economic growth.

All listed companies remain subject to the same standard of disclosure and governance, ensuring investors are protected and high levels of integrity remain in the UK markets.

Key changes are:-

• Replacing the current premium and standard listing segments into a single segment for equity shares in commercial companies referred to as ESCC ‘equity shares (commercial companies)’. This benefits smaller and high growth companies which may have been previously unable to enter the UK capital markets due to the rigorous requirements for a premium listing. The AIM market remains unaffected by this change.
• Streamlining decision making by the removal of mandatory votes on significant and related party transactions for commercial companies, instead adopting a more disclosure based approach. This will save companies money and enhance their ability to react to market conditions and opportunities. Shareholder approval will still be required for major decisions including reverse takeovers and delisting.
• Reducing the minimum level of free float shares to be held by the public at the time of listing, which will enable founders and pre-float investors to retain greater control of their companies after floating. In addition, the removal of the current premium listing requirement to demonstrate a three year revenue track record and clean working capital statements.
• Increasing the flexibility on listing rules for shell companies and SPACS, improving their attractiveness to companies looking to use them as a means of listing on a UK market.