FCA finalises UK listing rule changes

December 10, 2021

The UK will introduce new dual share class structures and raise the minimum market capitalisation threshold to £30 million under fresh amendments to the country's listing rules.

The changes were announced by the Financial Conduct Authority (FCA) this week as part of its Primary Market Effectiveness Review.

The regulator said the developments should reduce barriers and costs for companies considering listing in the UK. The overhaul is aimed at encouraging more companies to become or stay listed in the UK, as well as increase investor confidence in listed markets.

The FCA had initially proposed increasing the minimum market capitalisation from £700,000 to £50 million but acknowledged concerns raised during its consultation that the higher threshold could exclude some small firms.

Companies that have already completed a listing application and submitted it to the FCA under the £700,000 minimum will be allowed to continue if they list by 2 June 2023. Other exceptions have been made for shell companies and special purpose acquisition companies under certain circumstances.

On dual class share structures (DCSS), the FCA said it would facilitate a "targeted and time-limited" format for premium listings. DCSS companies are typically unable to access premium listed markets.

The FCA will introduce a conditional five-year exception to the current rule that restricts votes on matters relevant to premium listing to holders of premium listed shares only is being introduced.

“We do not see strong evidence to support a need for any broader application of DCSS in the premium listing segment," the regulator stated. "This also takes into consideration our view that the premium listing segment should continue to represent a high standard of corporate governance and shareholder engagement."

Meanwhile, the regulator also set out plans to lower the minimum proportion of shares that have to be held in public hands to 10% from 25%.

The changes follow a consultation over the summer, which focused on reviewing the effectiveness of the UK’s primary markets.