As part of our series on the changes to the London listing regime brought in by the new UK Listing Rules (UKLR), this blog looks at the changes made by the reforms that will apply to all issuers – of London-listed shares, GDRs and debt securities.
Listing principles
The UKLR remove the distinction between the listing principles and premium listing principles. The new regime (set out in UKLR 2) applies one combined set of six listing principles to all issuers. The remaining two premium listing principles (former premium listing principles 3 and 4) are reformulated as rules, and will therefore continue to apply only to issuers on the commercial companies and closed-ended investment company categories.
In terms of continuing obligations, all issuers continue to be subject to Listing Principle 1 on systems and controls and Listing Principle 2 on dealings with the FCA. The UKLR do, however, add some new guidance to the interpretation of these principles, emphasising the role of directors and the ability of the company to access information when required by the FCA. In addition all issuers (including issuers of GDRs and debt securities) are now subject to:
- Listing Principle 3 on director responsibilities and obligations (former premium listing principle 1);
- Listing Principle 4 on acting with integrity (former premium listing principle 2);
- Listing Principle 5 on treating holders equally (former premium listing principle 5); and
- Listing Principle 6 on avoiding a false market (former premium listing principle 6).
As formerly standard-listed issuers of shares, GDRs and debt securities are newly subject to these principles, they may wish to give particular consideration to how to communicate information to the market in such a way as to avoid the creation or continuation of a false market in their listed securities (Listing Principle 6). There is no specific test that can be applied to this requirement, but to minimise concerns a listed company should ensure it communicates with the market in a clear, accurate and timely manner and regularly monitors market expectations.
Issuers formerly on the standard segment (including issuers of GDRs and debt securities) benefit from a six month transitional period up to and including 29 January 2025. During this transitional period, they will not be required to comply with Listing Principles 3-6, but they would be well advised to use this period to prepare for application of these principles by putting in place appropriate systems and controls for compliance.
Board confirmation
Another key new requirement - that will apply to all companies making their first application for admission of securities on or after 29 July 2024 - is the need to provide a written board confirmation as part of an application for listing. It includes confirmation that the issuer has taken reasonable steps to establish adequate procedures, systems and controls to enable it to comply with relevant obligations (per Listing Principle 1). Confirmation is also required that the issuer has taken into account guidance that its procedures, systems and controls should address the identification of when key rules apply, the identification and provision of timely and accurate disclosure to the market, the provision of information to the FCA and the ability to explain to the FCA how information can be accessed, as well as the obligation of directors to ensure that adequate governance arrangements are established and maintained at all times to enable the issuer to comply with Listing Principle 1.
The required confirmation must be made on the new Procedures, Systems and Controls Confirmation Form (which is set out in Appendix 3 to PS 24/6 and will be available on the FCA website from 29 July 2024).
Existing listed issuers will not need to give the board confirmation in connection with an application for the admission of securities of the same class as securities that are already listed, or an application for the admission of a new class of securities; clarification from the FCA on whether the reference to a ‘new class’ of securities should be read to cover different security types – meaning no new confirmation would be required if, for example, an issuer of debt sought an additional listing of shares – would be welcome.
For applications to list shares, this new board confirmation is required in addition to any sponsor declaration that may be required, for example for shares listed on the commercial companies category.
Contact details and service of notices
As an administrative matter, the UKLR also require all issuers to provide contact details for key persons (at least two executive directors or a sole executive director – if an issuer does not have executive directors, contact details for non-executive director(s) are required), to the FCA, and details of the nominated person and electronic or UK postal address at which the issuer will accept service of notices. These contact provisions are in addition to the requirement to provide the FCA with a first point of contact that continues to apply to certain issuers, including issuers of shares listed on the commercial companies or international secondary listing categories (as on the standard segment, no first point of contact details are required for debt issuers).
The FCA has provided a combined form for the provision of these details (which is set out in Appendix 3 to PS 24/6 and will be available on the FCA website from 29 July 2024).
What comes next?
The UKLR apply from 29 July 2024, subject to application of transitional provisions. To aid navigation of the new rules we have prepared a table that tracks the application of each chapter of the UKLR and the most substantive equivalent under the former listing rules.
The FCA continues to update its Knowledge Base to reflect the UKLR (see Primary Market Bulletin 48 and Primary Market Bulletin 50). These and further changes are expected to be finalised in the coming months.
FTSE will publish updated FTSE UK Index Series Ground Rules to reflect the impact of the listing regime reforms on 26 July 2024.
And in the connected area of prospectus reform, the FCA plans to publish consultation proposals on the new public offers and admissions to trading regime in summer 2024.
For more information on the listing regime changes please get in touch with your usual Freshfields capital markets contact.
