FSA propose changes to the listing rules (12/05)

31 January 2012

Introduction

The changes proposed recently by the FSA are, essentially, updates taking into account market developments. These Listing Rules are the responsibility of the United Kingdom Listing Authority (UKLA) operating under the FSA. A consultation Paper has been produced by the FSA which also addresses wider issues such as the premium listing standard.

Background

The Listing Rules were introduced in 2000 and have been reviewed regularly ever since. The last review was 2008 to 2010 and it was that review that introduced the premium and standard segments in order to provide greater clarity for investors. FSA now want to consider some mostly technical proposals under the following headings:

Reverse Takeovers; Here the emphasis is on ensuring that reverse takeovers cannot be used as a route to listing via the “back door” by companies that would otherwise not be eligible. Currently, there are some exemptions that remove certain acquisitions from the reverse takeover requirements. The changes currently proposed will reduce those exemptions.
Sponsor Regime; The role of a sponsor is to help the premium listed companies to understand the regulatory framework and to provide reassurance to the UKLA that companies are meeting the requirements. The current proposals will clarify the expectations of UKLA of sponsors, for example by adding a rule ensuring that FSA can require a sponsor to confirm that its client is complying with the listing rules.
Externally managed companies; These are offshore advisory firms designated “externally managed companies by UKLA. This is a structure that places the offshore advisory company beyond many of the key controls within the listing regime and reduces the ability of shareholders to hold the real management company to account. The current consultation proposes that the management of the advisory company should be responsible for any prospectus issued by the listed company and subject to existing rules about dealing in the shares of the listed company. Externally managed companies would only be eligible for a standard listing.
Premium Listings; Two issues have been debated recently. These are about some of the requirements for the premium listing standard and the criteria used to define inclusion in the main stock market index, which was recently the subject of a FTSE consultation. There is a broader discussion to be had about whether the premium listing standard should be enhanced. The current Consultation paper invites comment on whether there should be any changes to the listing rules to provide additional protection to investors.

The Consultation paper can be found here.

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