IA response to the FCA consultation on UK listings regime

Commenting on the FCA’s proposals from the Primary Markets Effectiveness Review (CP23/10), Chris Cummings, CEO of the Investment Association, said: “We want the UK to be the most globally attractive place for companies to list, invest and do business. To remain internationally competitive, innovation is key, and we welcome the FCA’s new blueprint for significant reform and changes to the current listing rules to bolster UK competitiveness, while maintaining high standards of disclosure and transparency. The UK has long been respected as the world leader for stewardship and corporate governance, and it is important that as we work together to attract and retain innovative companies, we ensure that investors have a reasonable level of protection. In this way, we can continue to deliver long term returns for our clients”.

In summary:

• The IA is concerned about the decline in innovative new firms choosing to list in London. Overly restrictive Listing Requirements have acted as one of several reasons why some companies have listed elsewhere.
• The IA supports many of the clear proposals put forward within this consultation, including the proposal to replace standard and premium listing share categories with a single segment for commercial company issuers of equity shares. We hope that this simplification will lower potential costs and complexities for issuers and encourage high-quality companies to list and operate in the UK.
• The IA is committed to working with the Government and regulator to find new ways to guarantee shareholder protections, which ensure companies can still be held accountable for their actions. As currently drafted, the proposals place greater stewardship responsibilities on some investment managers but offer a diminished ability to implement them. This includes: the removal of a shareholder vote for significant transactions, the removal of a shareholder vote for Related Party Transactions, and the watering down of Dual Class Share Structure restrictions.
• While the listings rules play a role in determining where companies choose to list, wider structural factors play a greater role. This includes: lower valuations, concerns regarding a lack of long-term political stability and competitive regulatory environment and eco-system, and a regulatory and commercial environment in the UK that disincentivises UK pension funds and retail investors from investing in the UK equities market.