UK Listing Reforms: FCA sets the stage for radical reform

The FCA has published a consultation paper outlining its potential approaches to reform substantially the UK's listing regime ("CP21/21") together with a press release. This follows proposals set out in Lord Hill's UK Listing Review (see The UK Listing Review - seizing the opportunity for reform? for more information) and the Kalifa Review of UK FinTech, both of which highlighted specific elements of the listing regime that act as barriers to companies listing and made recommendations for change.

The FCA has already published final rules on SPACs in response to those recommendations (see Keeping up with the neighbours? FCA consults on a new UK SPAC regime) which we will cover in a separate note.

HM Treasury has also published a consultation paper outlining wide-ranging proposals to reform the UK's prospectus regime (see UK prospectus regime - HMT publishes its consultation paper).

Overview

The FCA's consultation is in two parts. Firstly, there is a broad discussion on the purpose and value of the Official List and whether wider-reaching reforms could improve the longer-term effectiveness of the UK's capital markets.

Secondly, the FCA seeks to address issues with the existing regime that it feels are more urgent and do not impact the more holistic consultation. These involve:

• allowing dual class share structures ("DCSS") in the premium listing segment in certain limited circumstances;
• reducing the free float (amount of shares an issuer must have in public hands) for premium and standard listed companies from 25% to 10%;
• increasing the minimum market capitalisation threshold for the premium and standard listing segments for shares in companies (other than funds) from £700,000 to £50 million;
• seeking views on additional alternatives for some companies to the 3-year track record requirement; and
• making minor changes to the Listing Rules, Disclosure Guidance and Transparency Rules ("DTRs") and Prospectus Regulation Rules to simplify and modernise them.