The Financial Services Authority (the FSA) has published a consultation paper following its review of the structure of the Listing Regime. The proposed changes by the FSA aim to provide further clarity to the Listing Regime and help preserve the integrity of the UK markets.
The key proposal is that the FSA has decided to proceed with Option 2 set out in its earlier discussion paper (DP08/01) and is proposing that the Listing Regime be clearly divided into two segments to be labelled Premium and Standard Listings. This change has been proposed to assist transparency and enable market participants better to understand the differences in the duties of issuers.
Premium Listings will include all of the FSA's super equivalent standards. Only equity securities issued by commercial companies and closed and open-ended investment entities may have a Premium Listing. Standard Listings cover all other types of issuers of equities, global depository receipts (GDRs) and debt and securitised derivatives. These are only required to comply with EU minimum requirements.
The FSA further proposes:
- to enable Standard Listings for all companies, whether UK or overseas incorporated;
- to amend the disclosure required of overseas companies having a Premium Listing as regards their corporate governance so as to enable better comparison with UK corporate governance practice;
- to introduce a requirement to disclose whether overseas companies having a Premium Listing offer pre-emption rights for investors;
- to continue to allow transactions involving the issue of GDRs to occur without requiring the appointment of a sponsor;
- only to apply the Listing Principles to Premium Listings; and
- to provide a mechanism to allow issuers with listed equity securities to migrate between the Premium and Standard segments, without having to cancel their listing and re-apply.
The FSA is inviting responses to the consultation paper by 1 March 2009 and aims to publish feedback from the consultation in the summer of 2009.
In our view, these proposals have the merit of clarifying the principal options for FSA listing whilst providing a level playing field for UK issuers. The proposals represent a sensible compromise and would improve transparency and assist the London capital markets to remain competitive.