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  • UK Listing Regulator Proposes Changes to UK Listings Regime

    The U.K. Financial Conduct Authority has launched a consultation on changes to the U.K. listing regime. This consultation follows the recommendations made by Lord Hill in the U.K. Listing Review as well as the Kalifa Review of FinTech. Responses to the consultation may be submitted until September 14, 2021.

    The U.K. government is currently consulting on changes to the U.K. prospectus regime, having launched the U.K. Prospectus Review last week.

    The FCA's main proposals for removing barriers to listing include:

    1. Allowing dual class share structures (DCSS) within the premium listing segment in certain limited circumstances, which would enable holders of unlisted weighted voting rights shares, a specific kind of DCSS, to also participate in these votes. The proposal mirrors the Listing Review recommendation for DCSS. The FCA is proposing to introduce a five-year exception to the rule that restricts votes on matters relevant to premium listing to holders of premium listed shares only. The exception would apply where the class of shares with weighted voting rights meet the following conditions:
    • there is a maximum weighted voting ratio of 20:1 (note: in Hong Kong and Singapore this ratio is 10:1);
    • the shares may only be held by directors of the company or beneficiaries of such a director's estate;
    • weighted voting rights are only available for a vote on the removal of a director at any time and following a change of control, on any matter;
    • conversion to ordinary premium listed shares upon transfer to anyone other than a beneficiary of the director's estate.

    2. Reducing the free float required for both premium and standard listings from 25% to 10% both at listing and as a continuing obligation. If an issuer breaches the 10% level, the FCA would no longer allow them to show they had liquidity via other means, but instead ask for a plan for coming back into compliance as soon as possible. The Listing Review recommendation was to reduce the free float requirement to 15% in both listing segments and also reduce the exclusions from investors who can be counted within the free float and allow companies to use alternative measures to demonstrate sufficient liquidity in their shares after listing. The Kalifa Review recommended a reduction to 10% in the premium segment, but for a limited period of time post-IPO.

    3. Increasing the minimum market capitalization threshold for both the premium and standard listing segments for shares in companies other than funds from £700,000 to £50 million. This requirement would only apply for new listings and would not apply as a continuing obligation for currently listed companies. Listed companies that had a class of listed shares before the change and continue to do so after that may list additional classes of shares at the existing MMC of £700,000. The expected aggregate market value of shares of a closed-ended investment fund or open-ended investment company to be listed will remain as at least £700,000.

    View the FCA's U.K. Primary Markets consultation paper.

    You may like to see our client note on the U.K. Listing Review.

    View details of the Kalifa Review of FinTech.

    View details of the U.K. Prospectus Review.

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