The Financial Conduct Authority (FCA) of the United Kingdom (UK) has proposed new regulations for stock market listings to stimulate development as initial public offerings (IPOs) have slowed in the nation.
New Rules Designed to Streamline UK Listings
CNBC reported that the FCA said in a statement that the updated rules, which will be in force beginning on July 29, would simplify and streamline the UK's listing system, bringing it in line with other markets.
According to the regulator, the measures taken represent the most significant shift in the listing system in more than 30 years. More firms will be able to issue shares on the UK market, which will increase investment possibilities.
Among the most notable modifications is eliminating the "premium" and "standard" listing categories. Instead, "commercial companies" will serve as the overarching category for equity share offerings.
In the past, premium listings had different criteria than regular ones. Some requirements will be used for all listings, and others will be removed. Transactions between significant or related parties no longer need a vote, and there is more leeway in the new regulations regarding improved voting rights.
FCA said shareholder approval is still required for important events such as reverse takeovers and removal of the company's shares from an exchange. The regulations regarding listing eligibility are also changing. For example, corporations will no longer be required to present revenue data.
In Response to Declining UK Listings Market
The new regulations were announced just when the European listings market, particularly the UK industry, was experiencing a downturn. Several businesses have lately chosen to list in the United States.
According to the Financial Times, large firms like bookmaker Flutter and construction materials company CRH have relocated their principal listings to the US, leaving London unable to compete with New York for listings of high-growth start-ups.
The changes are a direct result of data in the 2021 UK Listing Review, which revealed that the number of UK-listed businesses has fallen by 40% since 2008 and that the country was home to only 5% of all IPOs worldwide from 2015 to 2020.
Join the Conversation