The UK Financial Conduct Authority has published a discussion paper proposing major changes to the rules applying to UK listed equity shares in commercial companies. The central proposal is to remove the distinction between ‘premium’ and ‘standard’ listing. In place of this there would be a single segment for the equity shares of commercial companies listed on the UK’s Official List, with a reduced and single set of eligibility requirements. These companies would also be subject to a single set of mandatory continuing obligations, but could choose whether to opt into a second set of supplementary obligations, depending on whether they and their shareholders thought this was appropriate. The discussion paper contains further details on these and other proposals, as summarised below.
The proposals in the discussion paper are being driven by concerns that a standard listing of equity shares in a commercial company is seen as inferior to a premium listing and lacks a defined purpose. A significant drawback is that standard listed shares are not eligible for inclusion in the FTSE UK Index Series. At the same time, the eligibility criteria and certain continuing obligations applicable to a premium listing are seen as a deterrent to younger, high growth companies, forcing them to look elsewhere for their IPO and listing.
In summary, the FCA’s proposals, on which it seeks feedback, are as follows:
- There would be a single segment for the equity shares of commercial companies listed on the UK’s Official List, with a single set of eligibility criteria.
- In a significant departure from the existing regime, the FCA proposes that the current eligibility requirements that prevent applications by companies with insufficient historical financial information, or a revenue earning track record, would no longer apply. Instead the emphasis would be on disclosure in the prospectus, providing a possible opportunity for a high growth company with a compelling investment proposition to obtain an earlier listing. The FCA also seeks views on whether it should permit qualified working capital statements in the prospectus.