FCA to consult on stock exchange listing rules

Since 2008, the number of companies listing in the UK has fallen by 40% according to The UK Listing Review.

The FCA believes the current rules are seen by some as “too complicated and onerous”. Politicians and regulators hope that increased listing in the UK will help economic growth.

The FCA’s proposed rules changes would help founders keep control of their companies by enabling them to hold shares with more voting rights.

The changes in the consultation paper, if enacted, would remove the two classes of listings and create a single category. Currently there are standard and premium listing segments.

The FCA said this move would “remove eligibility requirements that can deter early-stage companies, be more permissive on dual-class share structures, and remove mandatory shareholder votes on transactions such as acquisitions”.

However, some investor groups are concerned that this would undermine the rights of public company shareholders by diluting their influence if bosses control greater voting rights.

Richard Wilson, chief executive of Interactive Investor, told Sky News: “Distorted rights distort governance and accountability. When company founders seek external capital from shareholders, as equity owners, they must respect their shareholder rights.

“One share, one vote is a bedrock of shareholder democracy and we are concerned to see that the spectre of dual share classes, which we have actively lobbied against, still looms large.”

Stakeholders will have eight weeks to consider the proposals. Once responses from interested parties are received, the FCA will create a policy statement and publish it late this year or early in 2024.

Roger Clarke, chief executive of the real estate stock exchange IPSX, welcomed the move from the FCA to simplify the listing procedures.

“As evidenced by its consultation into UK listing rules, the FCA is beginning to recognise that a culture that seeks to eliminate risk completely will succeed in eliminating returns completely, hampering UK investment appetite,” said Clarke.

“That is in nobody’s interests and will lead to a disastrous future for UK pensioners and savers.

“An unintended consequence of years of creeping regulation to remove risk for investors has been the removal of entrepreneurial and innovative spirits in the financial markets that established London’s global dominant position.

“Investors can and should be trusted to take responsibility for their investment decisions. Regulated markets are essential, but risk-free markets are an illusion.”