Britain eyes shake-up in listing rules to attract more company flotations

LONDON: Britain’s financial watchdog said on Wednesday it will consult on streamlining its company listing rules to help London compete better with New York in company floats.

It said it would consult on replacing its twin-track standard and premium company listing regime with a single regime and set of requirements.

Britain made some changes to listing rules in 2021 to help attract tech company flotations as part of a wider set of reforms to keep London a globally competitive financial centre after being largely cut off from the European Union by Brexit.

The decision by UK chip designer Arm to only list in New York has added to calls for further changes, with the London Stock Exchange saying that “pace and precision” is needed in reforms.

“Rather than simply lamenting these decisions or insisting that a few regulatory levers would change the outcomes, it is important to recognise there has not until now been a fundamental discussion about the entire ecosystem,” Financial Conduct Authority chief executive Nikhil Rathi said in a speech.

The watchdog will publish a blueprint for further reform of the listings regime, he said.

“We plan to propose replacing our current standard and premium listing segments for shares in commercial companies with a single listing category with one set of requirements,” Rathi said in a speech.

“We can see the value in allowing experienced investors the flexibility to form their own judgement in making investment decisions based on issuers’ disclosures and rely on their considerable negotiating power.” The watchdog will propose scrapping requiring companies to have a three-year financial track record as a condition of listing, a challenge for start ups, Rathi said.

A more permissive approach to dual class share structures - whereby founders can retain control of a company - would also be proposed.

Compulsory shareholder votes for large corporate transactions, and for related party transactions - seen as an issue for Arm’s owner - would also be scrapped under the draft proposals, Rathi said.

But there was a need to be realistic about how much of an impact regulatory reform can achieve given many factors influence where a company lists, he said.