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New UK Listing Rules Limit Shareholder Rights

The Financial Conduct Authority (FCA) is proposing to simplify the UK’s listing rules to help attract more companies to the market and increase competition, but the move risks eroding shareholder rights. The proposal involves replacing the existing standard and premium listing segments with a single category for equity shares in commercial companies. A single equity category would remove eligibility requirements that can deter early-stage companies, be more permissive on dual class share structures, and remove mandatory shareholder votes on transactions such as acquisitions. The aim, according to the FCA, is to create a simpler and more accessible UK listing regime for companies, improve the attractiveness of listing in the UK, and provide a wider range of investment opportunities for investors. While the UK has been Europe’s biggest financial hub for many years, listings in the UK have reduced by 40% since 2008, according to The UK Listing Review.We want to encourage more companies to list and grow in the UK, versus other highly competitive international markets, said Nikhil Rathi, Chief Executive of the FCA. The proposed changes aim to rebalance the burden of regulation in favour of listed companies and investors who set their own risk appetite and terms of engagement, noted the regulator in a statement. The FCA’s work on listings is a key part of its commitment to strengthen the position of UK wholesale markets.

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