FCA set to implement new Listing Rules in May 2014


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In response to its previous consultation on “Enhancing the effectiveness of the listing regime” (CP13/15), the FCA has announced that the Board will consider the new Listing Rules on 1 May 2014, with implementation expected on 16 May 2014.

Proposed new Listing Rules

In November 2013, the FCA consulted, amongst other things, on additional rules for cancellation of a listing where there is a controlling shareholder.  If adopted, the new rules would require premium listed issuers to obtain a simple majority of the votes attaching to the shares of those independent shareholders voting on the resolution in addition to the existing requirement for approval from the holders of 75% of the shares voted in a general meeting.

For takeovers, an equivalent requirement based on acceptances would apply save that when an offeror has acquired or agreed to acquire more than 80% of the voting rights, no further approval/acceptances by independent shareholders would be required to cancel the premium listing.

It is anticipated that the other proposed changes relating to controlling shareholders set out in CP13/15 will also come into effect on 16 May 2014.  Key amongst these is the requirement for premium listed issuers to have:

  • a legally binding relationship agreement with a controlling shareholder containing specific provisions to deliver effective independence from the controlling shareholder. Existing premium listed companies will be given a six month transitional period to comply with these requirements (once the rules come into effect); and
  • provisions in their articles of association, where there is a controlling shareholder, for the election or re-election of any independent director using a dual voting structure ie. by the shareholders as a whole and by the independent shareholders as a separate class.  If either vote is defeated, a further resolution may be proposed after at least 90 days (a “cooling off period” to allow discussion) which may be passed by a simple majority of all shareholders.  The FCA is proposing a transitional period until the next general meeting for which a notice has not yet been given, for companies to comply with this requirement.

We await the final rules for the precise definition of a controlling shareholder but the percentage threshold will be set at 30%.

This update will be relevant to sponsors and issuers with a premium listing on the Main Market

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