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.