New Listing Rules published by the UK’s Financial Conduct Authority came into effect this summer.
The new rules will create a simpler regime for company listings in the UK – and, while Jersey and Guernsey companies can list on many other exchanges around the world, any increase in listing work in London can only be good for the Channel Islands, according to Ogier Partner Raulin Amy (pictured).
The new rules, which impact listings on the London Stock Exchange’s Main Market (as opposed to AIM), mark the most significant amendments to the UK’s listing regime in more than 30 years and aim ‘to support a wider range of companies to issue their shares on a UK exchange, increasing opportunities for investors”, according to the Financial Conduct Authority (FCA).
The Channel Islands have long been popular jurisdictions of incorporation for businesses seeking to list on the LSE, due to the flexibility of their legal regime within their Companies Law and compatibility with the UK’s legal, tax and regulatory regimes.
Key changes to the Listing Rules include:
- Relaxed disclosure regime: the Listing Rules pivot from what was previously a prescriptive disclosure regime to one with increased flexibility where the board of directors provide disclosures in respect of transactions the company may undertake
- Shareholder voting: Shareholder voting will no longer be required for significant or related party transactions other than reverse takeovers which will be encouraging for start-up companies who can access the Main Market significantly earlier than would have been possible under the old regime and continue to maintain an element of control over their companies.
- Dual class share structures: Companies with weighted voted rights or a bespoke class structure (typical in private companies) will find it easier to list due to the removal of the five-year sunset clause and the fact that weighted votes may be held by investors (natural or corporate) or employees of the listed company. Such a change will be helpful in the context of private equity funds who seek to retain control of the company once listed.
- Single listing category: Introducing a single listing category for the UK market brings the UK in line with other markets which do not have a distinction between ‘premium’ or ‘standard’ segment on the Official List.
- Reduced financial reporting hurdles: Companies with limited accounting records will find it easier to list, as the requirement (for premium listed companies) to provide three years of accounts and demonstrate a sound financial history (amongst other deliverables) has been removed. Such companies will now only need to comply with the requirements of the UK Prospectus Rules.
Commenting on the implications of the new rules with regards to their impact on the Channel Islands, Raulin Amy, Partner at Ogier, said: “The streamlined Listing Rules demonstrate the FCA and UK government’s aim to encourage investors into what they hope will be regarded as a revitalised and attractive UK capital market – a competitive proposition to other international exchanges.
“The changes will hopefully make it easier and more cost effective to list on the Main Market. This can only be regarded as positive news for the Channel Islands as there have always been close ties between them and the UK, meaning that Jersey and Guernsey can be viewed as well-regulated and flexible alternatives to using a UK company to list.”
