UK: Listing Rule amendments - FCA policy statement - dual class shares, free float and minimum capitalisation

New Listing Rules come into force today, following a consultation by the Financial Conduct Authority and, before that, the publication of the UK Listings Review report and recommendations. Further information about the changes now in place can be found in the FCA's policy statement, available here (pdf). The principal changes include: (1) permitting dual class share structures within the premium listing segment; (2) lowering the minimum free float from 25% to 10%; and (3) for ordinary commercial companies listed on the premium or standard segments, increasing the minimum market capitalisation threshold from £700,000 to £30 million (so, lower than the £50 million originally proposed). 

UK: The UK Listings Review - terms of reference and call for evidence

The terms of reference, and a call for evidence, for the recently announced review of the UK listings regime were published today: see, respectively, here and here.

The review, which is being led by Lord Hill of Oareford, has been asked, to quote directly from the terms of reference, to propose recommendations "for how to boost the UK as a destination for IPOs and optimise the capital raising process for companies seeking to list on the main UK markets". 

The call for evidence invites views on a number of matters such as free float requirements, dual class structures, track record requirements, prospectuses and dual and secondary listing. Various questions are asked including whether dual class share structures should be permitted in the Premium Listing segment of the London Stock Exchange and should the current free float requirement of 25% be changed. 

UK: FSA seeks views on premium listing regime and proposes other amendments

The Financial Services Authority has published for consultation proposed amendments to the Listing Rules, Prospectus Rules, and the Disclosure Rules and Transparency Rules: see here (pdf). The FSA is also seeking views on the nature of the premium listing standard more generally and whether changes are needed to enhance the protections provided to shareholders regarding, for example, related party transactions, free float requirements and whether it should be a condition of listing that companies with controlling shareholders should be capable of carrying out their business independently of such controlling shareholders.

Singapore: director disqualification and corporate governance

A copy of the High Court decision Ong Chow Hong (alias Ong Chaw Ping) v Public Prosecutor [2011] SGHC 93, delivered earlier this month, has been published on the Singapore Law Watch website: see here. The case is noteworthy because of the interesting discussion of the purpose of the regime for the disqualification of directors, the relationship between disqualification and corporate governance standards, as well as the duties of listed company directors. It concerned the disqualification of the chairman of a listed company following a breach of Section 157(1) of the Companies Act (the chairman had approved the release of a public announcement concerning the company without reviewing its contents).

The trial judge, with reference to the disqualification regimes in the UK and Australia, concluded that in Singapore the predominant purpose of disqualification was the protection of the public (the judge below held that the purpose was predominantly punitive) and proceeded to note that this "shield of protection" had two sides (paras. [22] and [23]):

"On one hand, the public ought to be protected from an individual who has failed to discharge his obligations qua director. This side of protection may be viewed as specific protection, or what I would prefer to term as the “thin” definition of protection. To date, case law in Singapore appeared to have been largely focused on this narrower aspect of protection as being the only appropriate consideration. On the other hand, there is another side of protection that has been overlooked. This side is equally, if not even more, significant in some matters, particularly those involving listed companies. This is the need to generally protect the public from all errant directors by an uncompromising reaffirmation of the expected exemplary standards of corporate governance".

The trial judge held that the one year period of disqualification originally imposed was inadequate and doubled its length. In reaching this decision, the trial judge made these comments on directors' reliance on others (para. [34]):

Directors of listed companies in Singapore have to appreciate that our present disclosure based regime requires accurate and prompt disclosure to function effectively. It would never be sufficient or acceptable for a director to say that he expected his co-directors to do “right” by the company. Every director has to ensure that he discharges his responsibilities with due diligence in all pertinent matters. Therefore, any reliance on professionals or any reliance placed on “specialised” directors must be balanced against the responsibility that the law placed upon every individual director to bring to bear their own judgment in evaluating the advice received. Directors cannot adopt a silo approach and invariably seek shelter behind other “specialised” directors on the notion of reliance ..."

Note: the next update will be on Tuesday, May 3.

UK: the FSA's listing regime review

The Financial Services Authority has published a policy statement and consultation paper with regard to its restructuring of the listing regime into premium and standard segments. The issues for consultation concern the draft rule requiring overseas companies in the premium segment to offer pre-emption rights to shareholders and the rule clarifying that equity securities with a standard listing must be admitted to trading on a regulated market. For background information see here. 

UK: issue 22 of LIST! published - UKLA reminder on compliance with the Listing Principles

Issue 22 of LIST! - the UK Listing Authority newsletter - was published at the end of August. The newsletter adopts a question and answer format to deal with some of the issues raised in the course of the UKLA's work. The newsletter also provide a reminder concerning compliance with the Listing Principles:

We sometimes get queries about the interaction between the Listing Principles (set out in LR7) and the Disclosure & Transparency Rules (DTRs) and Prospectus Rules (PRs).We therefore thought it would be helpful to remind issuers of the approach we take regarding compliance with the Listing Principles. The Principles are a general statement of the fundamental obligations of listed companies. They were introduced to ensure adherence to the spirit as well as the letter of the various rules, including the DTRs and PRs, comprising the listing regime.

Issuers should therefore be aware of the importance we place on compliance with the Principles on an ongoing basis. As our Handbook notes, a breach of a Listing Principle will make a listed company liable to disciplinary action by the FSA. While cases may be brought in conjunction with action for a breach of a specific rule or rules, the FSA is prepared to take enforcement action on the basis of the Principles alone, taking account of the standard of conduct required by the Listing Principle in question".