Yesterday the Financial Services Authority published a consultation paper titled Enhancing the effectiveness of the listing regime: see here (pdf). The paper is divided into two parts. The first part contains the amendments the FSA proposes to make to the Listing Rules, Prospectus Rules and the Disclosure Rules and Transparency Rules following an earlier consultation. The second part of the paper contains some new proposals for further amendments to the Listing Rules the purpose of which is to enhance the effectiveness of the listing regime. These focus in particular on companies seeking a premium listing where there is a controlling shareholder and, in this regard, four proposals are particularly noteworthy.First, the FSA proposes that companies with a controlling shareholder seeking a premium listing should be required to have a board where [a] the majority of the directors are independent or [b] an independent chairman and independent directors together comprise at least half the board. This would be a mandatory requirement and a continuing obligation. Second, the FSA proposes that the independent directors of such companies should be subject to a dual voting mechanism whereby their election would be dependent on obtaining the approval of [a] the shareholders as a whole and [b] the independent shareholders. Third, such companies would be required to have a relationship agreement in place to govern the relationship between the company and its controlling shareholder, setting out legally binding requirements regarding the day to day running of the company and the terms of transactions between the company and the shareholder. Fourth, the FSA is proposing changes in respect of the voting rights and powers of premium listed shares. In particular, it is proposed that only those shares that are premium listed should be eligible to participate in a vote that the company is required to undertake by virtue of its premium listing.
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