UK Listing, Rules Disclosure Guidance and Transparency Rules

​An overview of recent developments.

New premium listing category for sovereign controlled companies

On 08 June 2018, the FCA announced that it is creating a new premium listing category for sovereign controlled commercial companies (sovereign controlled companies), designed to recognise that a sovereign controlled company and the state that owns it have a different relationship to a company with a private controlling shareholder (PS18/11). This new category will be effective from 01 July 2018.

See New Premium listing category proposal for sovereign controlled companies for the background to, and consultation on, these new rules.

Sovereign controlled companies will have to comply with all of the rules for the premium listing category for commercial companies other than the following two requirements:

  • a controlling shareholder agreement, and
  • an advance sponsor opinion or advance approval by independent shareholders of certain transactions with the sovereign controlled company and its associates.

These will not apply to allow for the difficulties that sovereign controlled companies would otherwise have in meeting these requirements due to the way in which sovereign owners structure their controlling relationship. The FCA has also taken into account the fact that significant information will be in the public domain about the relationship between the issuer and the sovereign, and about the sovereign itself, which should allow investors to make an informed assessment about the relationship.

In response to the feedback received, the FCA has however, amended its original proposals so that some of the controlling shareholder and related party rules will apply to sovereign controlled companies. They will have to:

  • allow independent shareholders to have an additional vote on the election of independent directors (and include these provisions in the company’s constitution), and
  • comply with the disclosure obligations for related party transactions in Chapter 11 of the Listing Rules.

These companies will also have to comply with all other premium listing rules including carrying on an independent business as its main activity, having in place other systems and controls commensurate with being a premium listed company, compliance with the FRC’s Corporate Governance Code, proportionate voting rights and adherence to principles of a pre-emption regime.

See New premium listing category for sovereign controlled companies for more information

Availability of information in the UK equity IPO process

On 26 October 2017, the Financial Conduct Authority (FCA) published its final rule changes which alter the timing, frequency and quality of information provided in connection with an equity Initial Public Offering (IPO) process and address conflicts of interest when analysts participate in discussions with a potential issuer pre-mandate stage (PS17/23). The new rules are substantially in the same format as proposed in CP 17/5 but with some amendments to reflect the responses received. (See Reforming the availability of information in the UK equity IPO process: FCA publishes new consultation paper for a summary of CP17/5.) 

The rule changes came into effect on 01 July 2018 to minimise disruption to existing or prospective IPOs and to allow time for the industry guidelines relating to unconnected analysts to be developed. The rules only apply in relation to an IPO if all of the key events governed by the new rules (namely analyst presentations, the publication of a prospectus or registration document and the release of connected research) take place after 01 July 2018.

The main changes are:

  • a new requirement that an approved prospectus or registration document must be published and unconnected analysts must have had access to the issuer’s management before any connected research can be published, and
  • clarification that “participating in pitches for new business” (in COBS 12) includes where an analyst interacts with the issuer’s management, shareholders or corporate finance advisers before the firm has accepted a mandate to carry out underwriting or placing services for the issuer and the firm’s position in the syndicate has been confirmed in writing.

These changes apply to both premium and standard listings.

See FCA rule changes alter the availability of information in the UK equity IPO process for more information.

FCA review of UK primary markets

The FCA has published its final changes to the Listing Rules and new Technical Notes in response to its review of the effectiveness of primary markets (PS17/22), most of which are technical enhancements rather than fundamental changes and are predominantly in the same format as in the consultation (CP17/4). These changes took effect on 01 January 2018.

The FCA has also published its feedback statement to its discussion on the effectiveness of primary markets (FS 17/3) and is giving further consideration to certain points raised.

See FCA review of the effectiveness of primary markets: minor rule changes and further discussion for a summary of the Listing Rule changes and the topics the FCA has decided to give further consideration to.

FCA publishes draft Technical Note on periodic financial information and inside information

The Financial Conduct Authority (FCA) has issued, for consultation, its updated Technical Note on identifying and handling inside information when preparing periodic financial reports (FCA/TN/506.2). It provides an example of a legitimate interest for delaying disclosure which could be used where inside information emerges during the preparation of a periodic financial report and will be included in the final report.

This Technical Note has been updated to address concerns about when issuers can delay the disclosure of inside information which is discovered in the process of preparing a periodic financial report. Issuers are required, under the Market Abuse Regulation, to disclose any inside information as soon as possible unless one of the limited circumstances for delay applies.

FCA Quarterly consultation

On 01 December 2017, the FCA published its nineteenth quarterly consultation paper (CP17/39). This includes:

  • a proposed change to the Listing Rules to add the words “or continuation” to Premium Listing Principle 6 (communication of information in such a way as to avoid the creation of a false market) to conform the wording to its predecessor, Listing Principle 4, and to ensure that it covers both the creation and the continuation of a false market, and
  • an amendment to the DTRs to clarify that the corporate governance statement (that must include a company’s diversity policy for financial years beginning on or after 01 January 2017) can be in a separate report published with the annual report or in a document published on the company’s website.

Comments were due by 01 February 2018.

Primary Market Bulletin No.18

On 31 August 2017, the FCA published Primary Market Bulletin No. 18. This edition provides feedback on changes to the FCA’s Knowledge Base proposed in Primary Market Bulletin Nos. 16 and 17. The FCA is also consulting on further changes to the Knowledge Base, including three new Technical Notes relating to certain sponsor obligations under the Listing Rules. Comments were due by 11 October 2017.

Consultations still outstanding from earlier PMBs are amendments to:

  • UKLA/TN/604.2 (PD advertisement regime) - have been postponed as it is likely to be affected by the FCA’s consultation paper on the availability of information in the UK equity IPO process
  • UKLA/TN/541.2 - have been postponed as discussions on whether the DTRs apply to global depositary receipts is still ongoing at EU level
  • UKLA/TN/202.2 (share buybacks with mix and match facilities) - as the FCA is still considering the feedback, and
  • UKLA/TN/306.2 as a result of MAR implementation - have been postponed as a result of further work the FCA is undertaking in this area.

See Primary Market Bulletin No.18: new guidance on sponsor obligations proposed and Primary Market Bulletin No. 18: new technical notes confirmed and new sponsor technical notes proposed for more information.

This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.