On 2 December 2021, the Financial Conduct Authority (FCA) published Policy Statement 21/22 ‘Primary Market Effectiveness Review: Feedback and final changes to the Listing Rules’ (PS21/22).

In PS21/22 the FCA provides feedback to the comments received on Consultation Paper 21/21 ‘Primary Markets Effectiveness Review’ (CP21/21) and sets out final rules. In CP21/21 the FCA sought to gather input on how it can improve the Listing Rules to make it more efficient and accessible, while keeping high standards for the UK public markets. The FCA also consulted on targeted changes to the existing regime to remove barriers to listing and to improve the accessibility of its rulebooks.

In PS21/22 the FCA is making the following changes to the Listing Rules:

• Allowing a targeted form of dual class share structures within the premium listing segment to encourage innovative, often founder-led companies onto public markets sooner and so broaden the listed investment landscape for investors in the UK.
• Reducing the amount of shares an issuer is required to have in public hands (i.e. free float) from 25% to 10%, reducing potential barriers for issuers created by current requirements.
• Increasing the minimum market capitalisation (MMC) threshold for both the premium and standard listing segments for shares in ordinary commercial companies from £700,000 to £30 million. Raising the MMC will give investors greater trust and clarity about the types of company with shares admitted to different markets.

The FCA is also making minor changes to the Listing Rules, Disclosure Guidance and Transparency Rules and the Prospectus Regulation Rules. It is proceeding broadly as consulted on, with some minor changes to reflect feedback that certain changes did not quite achieve the intended policy effect. In one area related to the significant transaction rules, the FCA disagreed with feedback proposing a change in drafting and has maintained its approach as consulted on in making final rules.

The new rules came into force on 3 December 2021.

In CP21/21 the FCA also proposed whether there is a case for changes to the existing requirements for the financial track record of premium listed companies. In light of the feedback, and the examples given by respondents of where compliance with current rules may be costly, difficult, or lead to  provision of information which is not useful for investors, the FCA accepts that this is a more significant issue and will work to explore changes to the requirements.

The FCA will consider track record requirements within the Listing Rules as part of its work next year on the structure of the Listing regime with a view to consulting on them in due course. The FCA will also maintain its approach of engaging with issuers and their sponsors to find acceptable and pragmatic ways to meet this rule in the interim where it may pose challenges for some companies.

In PS21/22 the FCA does not provide feedback on the responses it received to the discussion of the functioning of the Listing regime (chapter 3 of CP 21/21). The FCA will provide further feedback and indicate next steps on this broader consideration of the Listing regime’s purpose and structure in the first half of 2022