UK's FCA publishes further draft UK Listing Rules

Why should I read this?

Following the consultation published in December 2023, the Financial Conduct Authority (FCA) has published a revised draft UK Listing Rules Instrument 2024. The Instrument now provides a complete draft set of UK Listing Rules (UKLR) that will regulate UK listings going forwards.

The first tranche of the revised draft rules was published in December 2023. The second tranche of draft rules will be of interest in particular to companies that will fall within a listing category other than the new commercial companies category, including companies that currently have a standard listing, shell companies and overseas companies with a secondary listing.

What is the background?

As those who have been following developments in this area will be aware, the FCA published a consultation in December 2023 setting out detailed proposals for significant reform of the UK listing regime. This includes replacing the premium and standard segments with a single category for equity shares in commercial companies. The December consultation included the first tranche of the draft UKLR, with the second tranche to follow. You can read more about the December consultation in our briefing: UK Financial Conduct Authority sets out detailed proposals for listing reform.

A complete draft UKLR Instrument, incorporating the second tranche of draft rules has now been published. The FCA webpage has also been updated.

What has now been published?

Some of the key additional draft rules that have now been published include:

• Rules for dealing with the FCA and publishing information (UKLR 1).
• Listing Principles that apply to all listed issuers (UKLR 2). The FCA propose that the current Premium Listing Principles and Listing Principles (except for Premium Listing Principles 3 and 4) will be combined into a single set of Listing Principles, set out in UKLR 2 alongside supporting guidance. Premium Listing Principles 3 and 4 will be converted into eligibility requirements which must be met at admission as part of the constitutional arrangements of an applicant to the commercial companies category under UKLR 5.
• Other listing categories - the remaining draft UKLRs for listing categories other than the commercial companies category, including for closed-ended investment funds (UKLR 11), open-ended investment companies (UKLR 12), shell companies (UKLR 13), the international commercial companies (secondary listing) category (UKLR 14), GDR issuers (UKLR 15), and issuers with listed securities in the listing categories for non-equity shares, debt, securitised derivatives and warrants and options (UKLR 16 to 19).
• Rules relevant to all listed securities - covering the process for admission to listing, together with rules relating to suspension, cancellation, restoration and transfer between listing categories (UKLR 20 and 21).
• Transition category obligations – the continuing obligations that will apply to the proposed transition category are set out in UKLR 22. This is the category for companies that currently have a standard listing (unless eligible for a different listing category). It will not be open to new applicants.
• Sponsor rules – sponsor requirements for the closed-ended investment funds (UKLR 11) and shell company categories (UKLR 13) have been added into UKLR 4.
• Sovereign-controlled issuers – certain dispensations for commercial companies with a sovereign controlling shareholder in relation to admission to listing (UKLR 5), continuing obligations (UKLR 6) and related party transactions (UKLR 8) are now included.
• Transitional provisions are also set out.

Which companies is this relevant to?

A number of the rules that have now been published will apply to all companies with a UK listing. In particular, companies that will fall within a listing category other than the commercial companies category (or are considering listing in one of these categories) will want to familiarise themselves with the revised UK Listing Rules that will apply to them. This includes international companies with a secondary listing and companies that currently have a standard listing that will be mapped to the closed transition category.

What’s next?

The FCA notes that it continues to seek comments on the first tranche of rules published in December 2023, as well as the full set of policy positions now published, by the original deadline of 22 March 2024. The FCA will however accept consultation submissions relating to the additional second tranche of rules published on 7 March 2024 and also a consequential changes instrument that has been published until 2 April 2024.

The FCA is in the process of reviewing the Technical and Procedural Notes in the FCA Knowledge Base and expects to consult on these through two issues of its Primary Market Bulletin during April and June 2024. Draft forms will also be published during the same period.

We will be highlighting some of the key changes for companies and potential listing applicants to be aware of from the second tranche of draft UKLR that have now been published in future updates.

Further reading on UK listing reform

UK Financial Conduct Authority sets out detailed proposals for listing reform