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Tuesday, Oct 07, 2025

FCA launches consultation paper to shake up stock exchange listing rules

FCA launches consultation paper to shake up stock exchange listing rules

The number of companies listing in the UK has dropped 40% since 2008 despite government and regulator efforts to lure businesses.
The UK financial watchdog will announce plans to change the rules on bringing companies into public ownership after a series of high profile businesses snubbed the London Stock Exchange.

The Financial Conduct Authority (FCA) will on Wednesday publish proposed changes to rules on listing companies on the London Stock Exchange.

It hopes to make regulation more effective, easier to understand and more competitive after the number of companies listing in the UK has fallen by 40% since 2008, according to The UK Listing Review, undertaken by Lord Hill.

The regulator says the current rules are "seen by some" as "too complicated and onerous". Politicians and regulators hope that increased listing in the UK will help economic growth.

Despite three prime ministers lobbying for it to list in London, major Cambridge-based microchip designer Arm decided to have its initial public offering (IPO) of shares on the New York Stock Exchange. Its owners viewed floating in New York the best way to recoup their $32bn (£26.7bn) investment in the company.

Some in Arm's parent company, Softbank, and the government, were critical of FCA and blamed "onerous" rules for the decision to go with New York.

The world's biggest supplier of building materials, CRH, also announced in March it was moving its primary listing to New York.

Concerns about companies exiting London for New York were reinforced when Paddy Power and Betfair owner, Flutter, announced it's to pursue a secondary listing across the Atlantic.

The FCA's proposed rules are designed to help founders retain control in their companies by enabling them to hold shares with more voting rights.

The changes in the consultation paper, if enacted, would remove the two classes of listings and create a single category. Currently there are standard and premium listing segments.

The FCA says this move would "remove eligibility requirements that can deter early-stage companies, be more permissive on dual class share structures, and remove mandatory shareholder votes on transactions such as acquisitions".

Removing some mandatory votes would "reduce frictions to companies pursuing their business strategies", the watchdog says.

Concern, however, has been raised about the impact of the changes on investor rights,

"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," the chief executive of a UK investment platform said.

"Dual-class structures, which come with differential voting rights, erode shareholder rights," Richard Wilson of Interactive Investor, said.

"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."

Stakeholders will have eight weeks to consider the proposals and issue responses. Once responses from interested parties are received the FCA will create a policy statement and publish it in late 2023 or early 2024.

Work on reforming rules has been ongoing since Brexit and Lord Hill began The UK Listing Review in 2020.

Responding to the consultation paper Lord Hill said "I very much welcome these proposals from the FCA, which build on the direction of travel we tried to set out in our listing review.

"If implemented, London would be able to stand toe to toe with our international competitors."

But factors beyond listing rules will influence where companies list, the FCA chief executive said.

"While regulation plays an important part, a company's decision on whether, and where to list, is influenced by many factors so substantive change will require a concerted effort from government and industry as well."

"Our proposed reforms would significantly rebalance the burden of regulation to the benefit of listed companies and investors who are willing to set their own risk appetite and terms of engagement," Nikhil Rathi said.
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