ICGN �concerned� for UK�s corporate governance standards

February 13th, 2024

The International Corporate Governance Network (ICGN) said it is �concerned� over the UK Financial Conduct Authority�s (FCA�s) planned reforms to the UK�s listings regime.

In a statement, the network said that the UK has a reputation for high-quality listing and governance standards which results in high overseas investor confidence.

It said investors� ability to act as effective stewards is reliant on them having strong shareholder rights and protections, and that it �fear[ed] this is in regression in the UK� due to the FCA�s planned reforms to the UK�s listings regime, including the proposal to replace the �standard� and �premium� segments with a single listing category.

It said: �We are particularly concerned by the introduction of a more permissive approach to dual class shares structures - with few shareholder protection safeguards - and the removal of shareholder votes prior to significant transactions and related party transactions.�

It stated that the proposals would expose investors to undue risk, with potentially significant implications for underlying beneficiaries.

The network said: �It is unclear whether the changes proposed to the listing rule would help attract listing in the UK, the proposed reforms are likely to harm the UK�s reputation as a market with robust investor protection, high corporate governance standards, strong reporting regime and a stable policy environment.�

It called on the FCA and other authorities to assess the potential unintended consequences of the measures, such as a reduction in the pool of institutional and retail investors willing to invest in UK-listed companies.

The reforms, which were first proposed by the FCA in 2021, also include raising the minimum market capitalisation threshold to �30 million.

The network includes Allianz Global Investors, AXA Investment Managers and Columbia Threadneedle Investments, representing $77 trillion in assets under management.

It also emphasised that the UK�s advanced corporate governance standards have encouraged other regulators worldwide in their own governance reforms and investors have used them as a gold standard.