FCA unveils biggest overhaul of listing rules in three decades

The financial regulator has shaken up UK listing rules, it was confirmed on Thursday, as it looks to encourage more companies to join the London Stock Exchange.

The Financial Conduct Authority said the changes, the biggest for more than three decades, would simplify the regime as well as better aligning the UK’s rules with international standards.

In particular, it is removing the need for votes on significant or related party transactions, and will offer flexibility around enhanced voting rights. Shareholder approval for key events is still required, however, including delisting or reverse takeovers.

There will also be just one category and streamlined eligibility for companies seeking to list shares in the UK.

Sarah Pritchard, executive director, markets and international, at the FCA, said: "A thriving capital is vital in delivering investment to growing companies plus returns and choice to investors. This is why we’re making it more straight forward for those seeking to list in the UK."

Rachel Reeves, chancellor, said: "These new rules represent a significant first step towards reinvigorating our capital markets, bringing the UK in line with international counterparts and ensuring we attract the most innovative companies to list here."

The London market has struggled in recent years to compete with rival stock exchanges, which boast deeper capital and higher valuations. As well as failing to attract high-growth start-ups, it has also lost established British companies.

Last year, Cambridge-based chip designer Arm shunned the City in favour of Wall Street, while Flutter shareholders backed a proposal to move its primary listing to New York from London earlier this year.

Building materials specialist CRH has also switched its main listing stateside, while tourist giant Tui abandoned its long-held dual listing earlier this year in favour of a sole listing in Germany.

However, some analysts sounded a note of caution about the regime change.

Dan Coatsworth, investment analyst at AJ Bell, said: "The government is clearly desperate to bolster UK listings as part of efforts to revitalise the City.

"However, the plans come with some serious potential negatives.

"The reforms risk diluting the quality of the UK stock market to a house made out of balsa wood. This includes giving shareholders less of a voice on matters like acquisitions, even though they are a company’s owners.

"It feels as if the listing reforms could make the UK market a riskier place for investors if we get a wave of companies of questionable quality taking advantage of the relaxed rules and listing in London.

"Junior market Aim took a long time to shake off its negative reputation as the being the Wild West for investors, and we certainly don’t want to see a similar tag slapped on the main market."

The new rules come in to effect on 29 July.