CP 25/2 – FCA consults on removing admission to listing process for further issuances
The FCA has published CP 25/2 in which it consults on, among other things, the proposal to remove the need to apply for admission to listing, as well as admission to trading, in relation to a further issue of shares (of a class that is already admitted to listing).
Admission to listing vs admission to trading
Although these processes happen simultaneously, admission to listing and admission to trading refer to different things. Admission to listing means admission to the FCA’s Official List – a list of all listed securities showing, among other things, the relevant listing category. Admission to trading means admission to a market for listed securities of a UK recognised investment exchange, for example the Main Market of the London Stock Exchange.
Parallel processes
The FCA highlights that admission to listing runs as a parallel process with admission to the relevant trading venue. Currently issuers must apply to the FCA for admission of securities to the Official List both when securities are first admitted to listing and for any further issues of shares (of the same class) thereafter. At the same time, issuers must also apply to the trading venue for the admission of both the original and further securities.
When securities are admitted to the Official List for the first time, the FCA approves the prospectus (unless an exemption applies), ensures that the relevant eligibility criteria are met and verifies that the securities are freely transferrable. No change is proposed to this, first time, procedure However, when further issues of shares are admitted to the Official list, the eligibility exercise is not repeated so the FCA questions the value of retaining the admission to listing process in this context.
A single listing application process in UKLR for all securities of the same class
Given that the FCA cannot see a strong case for maintaining a duplicative process for further issues, it proposes admitting an entire class of securities (issued and to be issued) to the Official List, rather than individual securities, meaning that future applications for admission to listing would not be needed for further issues. Changes are proposed to UKLRs 3 and 9 to remove the obligations to apply for admission to listing, in relation to further issues of shares, and new continuing obligations are proposed to ensure that all shares of a class admitted to listing are freely transferable and admitted to trading. Where a prospectus is required, this would still be reviewed and approved by the FCA.
