The FCA has today confirmed a series of rule changes to ensure that the UK’s public markets remain a trusted and attractive place to list successful companies, providing opportunities for companies to grow from which investors will benefit.
The reforms address, and build on, a number of the recommendations made in the UK Listing Review and the Kalifa Review of UK FinTech, with the FCA seizing the opportunity to update its rules to respond to the changing nature of companies looking to list while maintaining high standards for UK public markets.
The FCA is confirming the following changes:
- Allowing a targeted form of dual class share structures within the premium listing segment to encourage innovative, often founder-led companies onto public markets sooner and so broaden the listed investment landscape for investors in the UK.
- Reducing the amount of shares an issuer is required to have in public hands (i.e. free float) from 25% to 10%, reducing potential barriers for issuers created by current requirements.
- Increasing the minimum market capitalisation (MMC) threshold for both the premium and standard listing segments for shares in ordinary commercial companies from £700,000 to £30 million. Raising the MMC will give investors greater trust and clarity about the types of company with shares admitted to different markets.
The new rules come into force on 3 December 2021.
As part of its consultation, the FCA also asked for views on the overall structure of the UK listing regime and whether wider reforms could improve its longer-term effectiveness. There was strong engagement with this part of the paper and the FCA intends to provide further feedback on these responses in the first half of 2022, including proposed next steps.
Clare Cole, Director of Market Oversight at the FCA commented on the changes:
‘We need to act to meet the needs of an evolving marketplace. These changes ensure the UK's markets maintain their reputation for dynamism, helping support the new types of companies seeking the investment that drives economic growth and by giving investors more choice with appropriate protection.
‘Over the last few months, we have moved quickly to address areas where our rules could be improved to encourage innovation in primary markets. By taking this agile approach, we are pleased that new IPOs in 2022 will be able to benefit from the revised rules.’
Notes to editors
- According to the UK Listing Review, the number of listed companies in the UK has fallen by about 40% from a recent peak in 2008. Between 2015 and 2020, the UK accounted for only 5% of IPOs globally.
- Read PS21/22: Primary Market Effectiveness Review: Feedback and final changes to the Listing Rules
- The UK Listing Review, Chaired by Lord Hill, also made a recommendation to the FCA to consider changes to the Listing Rules in relation to SPACs in its final report published on 3 March 2021. The FCA published final rules on strengthening investor protections in SPACs in July 2021.
- The Kalifa Review of UK FinTech.
- Find out more information about the FCA.