Interactive Investor

ii comments on FCA listing rule reform

2nd May 2023 22:30

by Jemma Jackson from interactive investor

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interactive investor speaks from a shareholder democracy perspective.

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Today, the Financial Conduct Authority put out an embargoed press release (until 10:30pm today) announcing an update to its proposed reform and streamlining of the listing rules in the UK.

interactive investor welcomes reform that makes the UK a more attractive place to list to help boost UK economic growth. With listings in the UK down 40% since 2008, according to The UK Listing Review, we are conscious that change needs to come sooner rather than later.

But this can’t be at the expense of investor rights.

Richard Wilson, CEO, interactive investor, says: “We strongly support the principles behind listing rule reform to make the UK more competitive, but eroding shareholder rights risks undermining market standards, and this is not the right answer.

“Dual-class structures, which come with differential voting rights, erode shareholder rights. Distorted rights distort governance and accountability. When company founders seek external capital from shareholders, as equity owners they must respect their shareholder rights. One share, one vote is a bedrock of shareholder democracy and we are concerned to see that the spectre of dual share classes, which we have actively lobbied against, still looms large. Reference to removing mandatory shareholder votes on transactions such as acquisitions is another major red flag.

“We would also be concerned if the FCA were looking to sidestep responsibility for conducting due diligence as part of it acting as UK Listing Authority. 

“It will be interesting to see which companies qualify for inclusion in FTSE trackers once the ‘premium’ definitional point is dropped.”

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