On 7 March the FSA published a quarterly consultation paper proposing changes which will:
- remove the ability to telephone the UKLA helpdesk on a “no-names” basis. Under the proposals, requests for guidance will need to be made in writing to the UKLA, on a named basis, and, except for simple queries, the UKLA will respond in writing. Advisors will be able to telephone a separate line if the enquiry is urgent, but on a named basis. The FSA believes that these changes will reduce the risk, for both the UKLA and advisors, in providing guidance which is relied upon by advisors but which is given by the UKLA when it is often not fully informed about the facts of a case; and
- re-define the definition of “substantial shareholder” to exclude voting rights held by authorised firms, in certain situations. Chapter 11 of the Listing Rules contains rules and guidance for transactions/arrangements between a listed company and a related party. A related party will include a person who is a substantial shareholder ie a person who is able to exercise or control the exercise of 10% or more of the votes at a general meeting of the issuer. Currently, for example, if an investment bank is arranging or facilitating block trades between shareholders and other investors which amount to 10% or more of the voting rights of the issuer, a related party relationship will have been created, even though the bank may only hold the shares for a brief period of time. The FSA acknowledges that the rules were not intended to cover these situations and accordingly the new definition will exclude voting rights held by a person in specific circumstances.
The proposed abolition of “no-names” calls is a further confirmation of the UKLA’s seemingly inexorable drift away from being a user-friendly regulator prepared to interact with market participants in a way that promotes effective communication. While the UKLA rightly expects sponsors to be experts in the rules, this proposal risks increasing delay and bureaucracy for the many for what the UKLA sees as the abuse of those, the few, who use the helpdesk as their first port of call. In doing so at the same time as admitting that the majority of helpdesk calls it receives are on a “no-names” basis and recognising the value placed by advisers on this form of guidance, the UKLA appears more concerned with its own resourcing issues and “risk” than in meeting a clear market need. On the other hand, the “risk” to advisers that the UKLA identifies, of its advice changing on receipt of full and named disclosure, is already well understood and accepted by advisers; while the stated “benefit” to advisers of the new regime, of binding written guidance, has always been available. Will the UKLA think again?
Comments on these proposals must be received by 6 May 2012.