The new premium and standard segments of the UK listing regime take effect on 6 April 2010 and the FSA has now published the final rule amendments needed to implement the changes. Our briefing note, available here, provides an overview of the new regime and considers the implications for existing and potential issuers wishing to choose an appropriate market for their securities.
Overview of changes
The focus of the changes is on segmentation and labelling. The listing regime is divided into “standard” (previously “secondary”) listings, where listed companies comply with EU minimum standards, and “premium” (previously “primary”) listings where super-equivalent requirements apply (e.g. demonstrating a three year track record, appointing a sponsor on admission and complying with continuing obligations regarding substantial and related party transactions).
The new regime allows only voting equity shares to be listed on the premium segment. All other types of security must be listed under the standard segment, within which there are five categories: shares, GDRs, debt and debt-like securities, securitised derivatives, and miscellaneous securities. Open-ended investment companies and closed-ended investment funds can only list equity shares on the premium segment (they may also have standard listed shares, so long as they have a class of equity shares with a premium listing).
In implementing these new listing segments, the FSA has sought to adjust its rules so that they apply on a more consistent basis as between UK incorporated companies and overseas companies in each of the “standard” and “premium” segments.
The most significant changes are:
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To require companies with a standard listing of GDRs or shares (other than preference shares which are specialist securities) to include a corporate governance statement in the director’s report specifying the governance code that applies to them as well as details of internal financial control and risk management arrangements.
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Shares which do not have full voting rights are regarded as ineligible for premium listing by the FSA. Any such shares which currently have a primary listing will be moved to the standard listing segment in June 2012.
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To require overseas premium listed companies to comply or explain against the UK Combined Code.
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To require overseas premium listed companies to amend their constitutions to provide for shareholders to have pre-emption rights on secondary share issues. This rule will apply from 6 April 2011 to give existing issuers who do not already have such provisions time to amend their constitutions.
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To make the standard listing segment available to UK companies, for the first time.
- A premium listing will remain a prerequisite for:
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Inclusion in the FTSE UK series indices: other conditions for FTSE eligibility will also continue to apply as a premium listing of itself does not confer admission to the FTSE UK series indices.
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Investment funds and companies wanting to list their equity on the Official List: their sole option is premium listing. (Standard listing ceased to be available to these issuers following the implementation of the FSA’s Investment Entities Listing Review.)
The impact of the principal rule changes is discussed in our briefing note. A comparison of the main differences in the requirements for each of a premium and a standard listing of shares, a standard listing of GDRs and an AIM listing is set out at Appendix 1 of that note.
