UK Finalizes Primary Markets Effectiveness Review Changes

The U.K. Financial Conduct Authority has published a Policy Statement and final changes to the Listing Rules following its Primary Market Effectiveness Review consultation. The changes become effective on December 3, 2021 and mark a significant step in the reform of the U.K.'s listing regime. The amendments follow on from the changes to the listing rules made in August 2021 to remove from SPACs the automatic suspension of listing that they previously faced when undertaking their de-SPAC transaction. The amendments follow the Lord Hill Listing Review and Kalifa FinTech Review, both of which urged the U.K. Government implement significant reform to the U.K.'s listing regime, to make it more attractive to issuers (especially tech startups) and investors and to bring it into line with recent changes and the capital markets flexibility that its competitors - in Asia and the U.S. - already offer. We discussed the broad range of the Listing and FinTech Reviews' proposals in our UK Listing Regime Reform briefing.

These further changes include:

• allowing dual class share structures (DCSS) for premium listed companies subject to a number of strict conditions;
• reducing the free float requirement for both premium and standard listings to 10 percent (from 25 percent); and
• increasing the equity minimum market capitalisation (MMC) requirement for companies listing from £700,000 to £30,000,000 (with no change in the minimum market capitalization requirement of £200,000 for debt listing).

With the exception of reducing the increase in the new MMC to £30,000,000 instead of the £50,000,000 level that the FCA consulted on, the finalized rules reflect the FCA's July proposals. Further detail on these changes is discussed in our perspective, UK Listing Regime Reform - further changes to the Listing Rules.

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