The UK's Financial Conduct Authority has published the final form of its rules to create a new premium listing category for sovereign-controlled companies considering an IPO in London. These are designed to allow a state-controlled company to list on the premium segment of the UK's Official List without having to abide by some of the longstanding 'related party' restrictions and (more recent) controlling shareholder rules when interacting with its sovereign shareholder. Widely viewed as a move to encourage Saudi Aramco to list on the London Stock Exchange, the new rules may also attract a range of other sovereign-backed companies – something the UK government is keen to facilitate as part of its 'open for business' pitch post-Brexit.
In summary, the new rules (as amended following the issue of the original consultation paper) will mean the following for a company with a controlling sovereign-state shareholder:
- A transaction between the controlling shareholder and the company will not require a fairness opinion or independent shareholder approval (unlike dealings between the company and any other 10 per cent shareholder, or a director). However, following a change to the original proposals, the company will still have to announce these transactions to the market (subject to the usual exceptions, for example, for very small transactions). Buybacks of shares by the company from the controlling shareholder will also remain subject to the usual controls on buybacks from related parties.