FCA confirms new listing rules including dual-class structure

According to the UK Listing Review, the number of listed companies in the UK has fallen by about 40% from a peak in 2008. Between 2015 and 2020, the UK accounted for only 5% of IPOs globally.

In a policy statement released today (2 December) the FCA confirmed a number of changes that have been discussed in the UK Listing Review.

These include: allowing dual class structures (DCSS) within the premium listing segment; reducing the amount of shares an issuer is required to have in public hands from 25% to 10%; and increasing the minimum market capitalisation threshold for both premium and standard listed segments for shares in ordinary commercial companies from £700,000 to £30m.

Reforms to dual class structures may raise eyebrows as experts voiced concerns about this structure when it came to the Deliveroo IPO.

In the policy statement the FCA acknowledged there were some respondents who did not agree with the rules, but said the majority did.

“We believe that the premium listing segment provides wide and significant additional safeguards for shareholders, even if using our proposed form of DCSS,” the regulator said. “We consider that these are sufficient to maintain high corporate governance standards and investor confidence in such issuers. These safeguards are also significantly higher than in the standard listing segment, or on unlisted markets in the UK, where these companies may otherwise access public markets.”

The regulator said it will monitor the number and type of issuers that are using the new rules and how they are received by the market. It also will monitor to see if “new areas of misconduct are emerging or existing misconduct is increasing”.

The FCA is planning to provide further feedback on wider reforms to improve the “longer-term effectiveness” of the listing regime in the first half of next year.

Clare Cole, director of market oversight at the FCA, said: “We need to act to meet the needs of an evolving marketplace. These changes ensure the UK’s markets maintain their reputation for dynamism, helping support the new types of companies seeking the investment that drives economic growth and by giving investors more choice with appropriate protection.

“Over the last few months, we have moved quickly to address areas where our rules could be improved to encourage innovation in primary markets. By taking this agile approach, we are pleased that new IPOs in 2022 will be able to benefit from the revised rules.”

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