Following a two-year period of consultation, the UK's
Financial Services Authority (FSA) introduced its new two-tier
listing regime, which has been in effect since April 6, 2010. The
new regime allows all companies, UK or overseas, to choose either a
"Premium" or a "Standard" Listing on the
FSA's Official List. Other changes had been in force since
October 2009 as preliminary steps toward the new regime.
The FSA has introduced amendments to:
restructure and re-label the regime into two segments,
i.e., "Premium" and "Standard"
(broadly equivalent to the previous "Primary" and
"Secondary" labels) — the former being
available only to a commercial company listing equity shares and
requiring compliance with more stringent UK
"super-equivalent" standards, and the latter requiring
compliance only with European Union (EU) minimum standards;
make the Standard Listing segment, previously only available to
overseas companies, available to UK companies;
strengthen the rules for overseas companies by requiring
overseas Premium-Listed companies to "comply or explain"
against the UK Corporate Governance Code and offer pre-emption
rights to shareholders;
require overseas Premium- and Standard-Listed companies to
comply with the EU Company Reporting Directive that requires them,
among other things, to provide a corporate governance statement and
to describe the main features of their internal control and risk
management systems; and
simplify the process for companies with an equity listing
wishing to move from one segment to another by clarifying that a
cancellation of their listing is not required.
The FSA's objective is to show that London remains an
attractive place to list UK and overseas companies, with strong
investor protection. A Premium Listing is intended to reflect the
premium brand value of a London listing. Only issuers with a
Premium Listing are eligible to participate in any of the FTSE UK
A company applying for a Premium Listing must comply with every
eligibility requirement set out in the Listing Rules,
e.g., provide a three-year trading record, provide
criteria relating to the nature and control of the business and
assets, and appoint a sponsor to advise on the listing.
Furthermore, a Premium Listing carries a number of ongoing
additional requirements in relation to significant transactions
(such as, to obtain shareholder approval in certain instances) and
certain restrictions on the terms-of-rights issues and other
equity offers, and on the purchase of the issuer's own
the requirement to appoint a sponsor to advise on certain
requirements to adopt a directors' and officers' share
dealing code in the form of the "Model Code," and (as
referred to above) to "comply or explain" against the UK
Corporate Governance Code and to enshrine in the issuer's
constitution pre-emption rights in favour of existing shareholders
in respect of the issue of new equity.
An issuer with a Standard Listing has to satisfy only limited
eligibility criteria and must comply with only a limited set of
ongoing obligations under the new Listing Rules. Indeed, the
ongoing obligations under a Standard Listing are less onerous than
those of the AIM market, the junior London market operated by the
London Stock Exchange. It remains to be seen how the Standard
Listing segment will develop; one early trend is to seek a Standard
Listing where a London listing is required for consideration shares
issued on the takeover of a London-listed company.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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