UK launches new listing rules in bid to boost London Stock Exchange

A general view of a border marker featuring a dragon and the skyline of the City of London, the capital's financial district, as the Bank of England raises UK interest rates to 4%.

Vuk Valcic Sopa Images | Lightrocket | Getty Images

Britain's Financial Conduct Authority on Thursday announced new rules for stock market listings in the country, hoping to spur growth as the number of IPOs slows.

The new rules, which come into effect on July 29, will bring the UK listing system more in line with other markets and make it simpler and more streamlined, the FCA said in a statement.

The measures mark the biggest change to the listing regime in more than three decades, the FCA said. “They are designed to support a wider range of companies to list their shares on a UK stock exchange, increasing opportunities for investors,” the regulator added.

A key change is the removal of the 'premium' and 'standard' listing segments. Instead, there will be one general category for equity share listings, which has been named 'commercial companies'.

Premium listings previously had additional requirements compared to standard listings. Some of these carry over and are now applied to all listings, while others have been removed.

“The new rules remove the need for votes on material or related party transactions and provide flexibility around enhanced voting rights. Shareholder approval for material events, such as reverse takeovers and decisions to delist the company's shares, will still be required,” the FCA said.

Also, some rules around the admission of listings will change. For example, it will no longer be required that companies provide an overview of their turnover.

The rules are a positive step for the U.K. IPO market, but could have gone further, Chris Haynes, corporate partner at law firm Gibson Dunn, told CNBC in an email.

“The move to a single listing category with streamlined admission criteria and to disclosure-based ongoing obligations is one of the key initiatives that together should lead to increased IPO activity in the UK,” he said.

“I think the FCA could have created more flexibility in some areas, for example in relation to the dual-class share structure, but overall it is a good outcome,” Haynes added.

The new rules come at a time when the European listing market, and the UK in particular, has been in a slump. Big tech companies have recently favoured the US for their listings, including British chip designer Arm, which opted to list on New York’s Nasdaq last year.

Euronext reported 64 listings on its platform last year, a significant drop by the 83 listings it welcomed in 2022.

The new rules come in response to the 2021 UK Listing Review report, which found that the number of listed companies in the UK has fallen by around 40% since 2008 and that only 5% of global IPOs between 2015 and 2020 took place in the UK.

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