Simplified Listing Structure Boosting Business Listings in London

The regulator's proposal includes the creation of a single listing category with streamlined eligibility criteria and simplified ongoing requirements. Initially put forward in May, the FCA is now seeking to implement a disclosure-based process that allows investors to directly influence company behavior and make investment decisions. The proposal also suggests the removal of mandatory shareholder voting on significant transactions, while retaining the voting requirement for key events like reverse takeovers and delistings.

While these changes may potentially lead to more business failures, the FCA believes they are necessary to align with the risk appetite required for economic growth.

"We are committed to enhancing the appeal of U.K. capital markets, and supporting the competitiveness and growth of the country. It is crucial that others also consider what they can do to ensure that the U.K. remains an attractive destination for companies looking to raise capital," commented Sarah Pritchard, FCA's executive director for markets and international.

The FCA is now inviting interested parties to provide feedback on these proposals before finalizing its decision. If approved, the new listing structure is expected to be implemented in the second half of next year.

Strengthening the U.K. as a Listing Destination

"We are strengthening the U.K. as a listing destination, taking forward reforms to make it quicker to list, improve disclosure, and make our capital markets more efficient and open," says Economic Secretary to the Treasury Bim Afolami.

Decline in Number of Listed Companies

According to the U.K. listing review launched in November 2020, the number of listed companies in the U.K. has fallen by about 40% since its peak in 2008. The review also revealed that between 2015 and 2020, the U.K. accounted for only 5% of initial public offerings worldwide.

Potential Delisting and Relocations

London-listed German travel operator TUI AG recently announced that it is considering delisting from the London Stock Exchange and trading solely on the Frankfurt Stock Exchange. This decision follows requests from some shareholders to review the benefits of a simplified listing structure.

In September, Irish building-materials supplier CRH, which was previously listed on London's FTSE 100 index, moved its main listing to New York. Additionally, Flutter Entertainment, the parent company of well-known brands such as FanDuel, PokerStars, and Paddy Power, is planning to move to the U.S. while retaining its premium London listing. British chip maker Arm Holdings also opted for a stock market return in New York instead of London.

Conclusion

As the U.K. seeks to regain its status as a prominent listing destination, reforms are being pursued to streamline the listing process, enhance disclosure practices, and ensure the efficiency and openness of the country's capital markets.