Independent review recommends reforms to UK Listing rules to boost growth and markets

Wednesday March 3rd, 2021

The UK already has some of the world’s deepest and most liquid equity markets, with over £43 billion raised in 2020, and a track record of attracting the best companies from around the globe.

The UK Listing Review, led by Lord Hill, was launched by Chancellor Rishi Sunak in November last year to further enhance the UK’s position as an international destination for equity listings.

The Review examined how companies raise equity capital on UK public markets and makes a series of recommendations to improve the process, whilst maintaining the high standards of corporate governance, shareholder rights and transparency for which the UK is known.

The Review’s key recommendations include:

  • modernising listing rules to allow dual class share structures in the London Stock Exchange’s (LSE) premium listing segment, giving directors (in particular, founders) enhanced voting rights on certain decisions, with safeguards to maintain high corporate governance standards
  • reducing free float requirements – the amount of a company’s shares that are in public hands – from 25% to 15% and allow companies to use other measures to demonstrate liquidity
  • an annual report on the state of the City, and its competitive position, delivered to Parliament by the Chancellor
  • rebranding and repositioning the LSE’s standard listing segment to increase its appeal to companies of all sizes and types
  • a fundamental review of the prospectus regime so that in future, admission to a regulated market and offers to the public are treated separately – this will ensure it reflects the breadth and maturity of UK capital markets and the evolution in the types of business coming to market
  • liberalising the rules regarding special purpose acquisition companies (SPACs), with appropriate safeguards for investors

Further recommendations include making it easier for companies to provide forward-looking guidance when raising capital; considering how technology can help retail investors participate in stewardship; updating the Financial Conduct Authority’s statutory objectives to include a duty to take into account the UK’s attractiveness as a place to do business; tailoring information to meet investors’ needs better; improving the efficiency of the listing process; and addressing issues in the wider financial ecosystem.

The government will now examine the Review’s recommendations closely and set out next steps. Many of the recommendations, including changes to the listings regime, will require consultations by the Financial Conduct Authority.

Rishi Sunak, Chancellor of the Exchequer, said:

“We asked Lord Hill to lead this review because we wanted bold ideas. The UK is one of the best places in the world to start, grow and list a business – and we’re determined to enhance this reputation now we’ve left the EU.

That means boosting the UK’s business environment and making sure we continue to lead the world in providing open, dynamic capital markets for existing and innovative companies alike, whilst protecting the high standards that underpin our status as a world-leading financial centre.

The Review has more than delivered and I’m keen we move quickly to consult on its recommendations, cementing the UK’s reputation at the front of global financial services.”

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