UK Listing rule changes

The FCA has implemented several changes proposed in the UK Listing review and the Kalifa Review of Fintech. These changes aim to encourage innovative, founder-led companies to list in London.

“On the whole, the rule changes will be welcomed by investors and encourage more companies to list in the UK, albeit there are some concerns about weaker governance standards.”

Laurence Whitehead, MHA Corporate Finance Partner

Among the most significant changes is allowing a “targeted form” of dual class share structures within the premium listing segment, which will enable founders to retain a greater level of control post listing. Another major change is to reduce the amount of shares an issuer is required to place into public hands from 25% to 10%. This change aligns the UK listing rules more closely to those in the US. The minimum market cap threshold has also been increased from £700,000 to £30m. The FCA believes that raising the minimum market cap will give investors greater trust and clarity about the types of company with shares admitted to different markets.

Whilst we welcome the rule changes overall, there are some concerns that they will weaken London’s governance standards. The FCA has confirmed that it expects to implement more changes next year, considering the wide-ranging comments it has received on whether wider reforms could improve the stock market’s long-term effectiveness.  Consequently, we expect to see further feedback in the first half of 2022, including proposed next steps. Watch this space.

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