QCA Response to FCA Primary Markets Effectiveness Review

The QCA welcomes the publication of the FCA’s final Listing Rules which seek to boost growth and innovation on UK stock markets.

Today’s announcement (Thursday 11 July) marks the conclusion of the FCA’s Primary Markets Effectiveness Review (PMER), and represents the biggest overhaul of the UK’s listing regime in nearly forty years. The final version of the rules, which aim to provide a more flexible and simpler regime for companies whilst providing investors with the information they need, are part of wider efforts from policymakers to attract companies to list in the UK and encourage growth by easing regulatory requirements and better reflecting risk appetite.

Now the new Listing Rules have been published, a two-week implementation period has begun and will end on Monday 29 July when they officially come into effect.

Lord Hill’s Listing Review, which began in late 2020 and published its recommendations in March 2021, instigated the launch of the PMER in the summer of 2021. A brief timeline of the PMER is included below:

1. July 2021 – CP21/21 PMER (see our response here)
2. December 2021 – PS21/22 Policy Statement and changes to the Listing Rules
3. May 2022 – DP22/2 PMER: Feedback to the discussion of the purpose of the listing regime and further discussion (see our response here)
4. May 2023 – CP23/10 PMER: Feedback to DP22/2 and proposed equity listing rule reform (see our response here)
5. December 2023 – CP23/31 PMER: Feedback to CP23/10 and detailed proposals for listing rule reforms
   1. LR 8 – Sponsor Competence (see our response here)
   2. UKLR proposals regarding the replacement of the current LR sourcebook (see our response here)

The QCA responded to each of the five discussion papers/consultations. These responses totalled over 40,000 words collectively, and each of them were the result of multiple engagements with the FCA and hours of work by our Working Groups, which consisted predominantly of members of our Legal, Primary Markets and Secondary Markets Expert Group’s.

In our responses, we advocated for various measures that we believe would bolster the UK’s markets by increasing their attractiveness and accessibility. We are delighted to see that many of these proposals have been taken forward, including in relation to:

• Eligibility:
  • Removing the listing requirements for companies for historical financial information, revenue track record and clean working capital statements.
  • Sponsor requirement for new applicants.
• Eligibility and continuing obligations:
  • Removing eligibility and ongoing rules requiring that a company has an independent business and has operational control over its main activities.
  • Permitting companies to have dual/multiple class share structures at admission.
• Continuing obligations:
  • Removing the requirement for votes on significant transactions and related party transactions but with market notification for transactions above 25%.
  • Offering greater flexibility around enhanced voting rights.

The work is not yet fully complete, however. Later this year, we expect to see the publication of a consultation from the FCA on the new regime for public offers and admissions to trading (the Public Offers and Admissions to Trading Regulations (POATRs)) following their series of Engagement Papers published last year. This will replace the current UK prospectus regime and aim to promote efficient and effective primary markets for companies seeking to access public markets for the first time and when raising further capital.

We look forward to working with the FCA on the POATRs in order to ensure that small and mid-caps have the ability to list and raise funds in a time and cost-effective manner.