11 März 2024 Sarah Debney Equity Capital Markets

Listing regime reform: second tranche of the proposed UK Listing Rules published

The Financial Conduct Authority has published a revised draft of the proposed UK Listing Rules as part of its ongoing consultation on the reform of the listing regime.

Background

The FCA published its most recent feedback statement and consultation on the reform of the UK listing regime (CP23/31) at the end of 2023 (see MCN 2 January 2024). As part of that publication, the FCA released a portion of the proposed UK Listing Rules which are intended to replace the current Listing Rules sourcebook. This, first tranche broadly covered the rules relating to the equity shares (commercial companies) category (CCC). The full set of proposed rules – including the “second tranche" – have now been published by the FCA. A table setting out the structure of the proposed new rule book is included in UKLR 1.1.1 on page 49.

What do the second tranche rules cover?

The majority of the second tranche covers the specific rules relating to the other listing categories, such as the transition, shell companies, secondary listing and closed-ended investment fund categories. The transition category will allow existing standard listed commercial companies to remain listed without being forced to join the more onerous CCC regime. The secondary listing category is a new category for international companies that are subject to a full listing on another recognised market.

The new tranche also contains the proposed single set of Listing Principles and the alleviations from the CCC rules that would apply to sovereign controlled companies (which will, under the proposals, form part of the CCC, rather than having a dedicated category).

Listing principles and guidance

The single set of Listing Principles (UKLR 2.2) will apply to all listed companies. Under the current rules, only two Listing Principles apply to all companies, with the rest only applying to Premium Listed companies. The proposed single set of Principles requires companies to:

  • Have adequate systems and controls to comply with their listing obligations;
  • Deal with the FCA in an open and cooperative manner;
  • Take steps to ensure that their directors understand their responsibilities;
  • Act with integrity towards investors;
  • Treat security holders of the same class equally as regards their rights; and
  • Communicate information in such a way as to avoid a false market. 

Additional guidance on the Listing Principles emphasises the role of directors in ensuring that effective governance systems are in place and in dealing with the FCA in an open and cooperative manner. The guidance also focuses on the importance of providing information to the FCA or sponsors where required. 

Next steps

The consultation period for CP 23/31 (including the first tranche of rules) closes on 22 March. The FCA will accept comments on the second tranche rules until 2 April. The final rules are anticipated this summer and it is proposed that they will come into force two weeks after publication.