British regulators are launching a review of listing rules that aim to limit the use of reverse takeovers, among other things.
In a consultation paper released today, the UK’s Financial Services Authority is proposing a number of changes to its listing rules. The proposed changes are largely designed to beef up the rules and bolster investor protection.
The proposed changes aim to ensure that reverse takeovers cannot be used as a ‘back door’ route to listing for companies that would otherwise be ineligible.
They also aim to deal with the development of a new corporate structure, which involves the outsourcing of significant management functions to an offshore advisory firm that’s beyond many of the key controls within the listing regime and lessens the ability of shareholders to hold the management of a company accountable. The paper proposes to make the management of the advisory company responsible for any prospectus issued by the listed company and subject to existing rules about dealing in the shares of the listed company.
Additionally, the regulator is seeking to clarify the role of firms that sponsor listings, by adding a rule allowing the FSA to require a sponsor to confirm to the FSA that its client is complying with the listing rules.
The paper also asks for comment on whether any other changes are needed to provide additional protection to investors. Comments are due by April 26.
“It is important that the listing rules continue to keep pace with market developments and the needs of investors. We believe that this consultation, which proposes specific changes, but also invites debate about the corporate governance standards that should underpin the premium listing standard, will serve that purpose and welcome responses to help us maintain an appropriate regime for the UK,” said David Lawton, the FSA’s acting director of markets.