In an effort to rejuvenate its public markets, and to spark economic growth by embracing more investment risk, the U.K.’s Financial Conduct Authority (FCA) is undertaking the biggest reforms to its listing rules in more than 30 years.
The regulator published a set of changes, that will take effect July 29, designed to increase public listings by, among other things, introducing a simplified regime with a single listing category, and streamlining eligibility for companies seeking to list their shares in the U.K.
The reforms follow extensive public consultation, and were developed in the wake of a review that found that public listings have dropped 40% from their recent peak in 2008. The review found that initial public offering activity has also waned.
FCA said by boosting listings, the reforms would expand opportunities for investors. And while it acknowledged this will entail greater risk to investors, it believes the reforms reflect “the risk appetite the economy needs to achieve growth.”
“A thriving capital market is vital in delivering investment to growing companies plus returns and choice to investors. That’s why we are acting to make it more straightforward for those seeking to list in the U.K., while retaining vital protections so investors can help steer the businesses they co-own,” Sarah Pritchard, executive director, markets and international, at the FCA, said in a release.
As part of the effort to drive more listings, the reforms will also reduce some of the burden on public companies by cutting the obligations of public companies to seek shareholder approval for certain transactions — although they will still require approval for major events, such as reverse takeovers and delisting decisions.
The reforms also enhance flexibility around enhanced shareholder voting rights.
“Regulation is only part of the answer in helping the UK achieve sustainable growth. Other factors also play a significant role in influencing where a company decides to list. We’re committed to continually working together with all those who have a part to play in supporting a thriving UK capital market and thank everyone who has contributed to this work so far,” Pritchard said.
“These new rules represent a significant first step towards reinvigorating our capital markets, bringing the U.K. in line with international counterparts and ensuring we attract the most innovative companies to list here,” the UK’s new chancellor of the exchequer, Rachel Reeves, said.