The FCA Adopts A Number Of Technical And Structural Changes To The UK Listing Regime

On October 26, 2017, the UK Financial Conduct Authority (the "FCA") published a policy statement (the "Policy Statement")1 that introduces a number of changes to the UK Listing Rules ("LRs") and related guidance. The changes were designed to improve and clarify certain aspects of the UK listing regime and ensure that the UK capital markets function well and remain effective. These changes stem from a discussion paper2 and a consultation paper,3 both published by the FCA earlier in the year, that explored structural enhancements to the UK equity capital markets and set out proposals for technical amendments to the UK listing regime.

This client memorandum summarizes the final changes to the relevant LRs and related technical notes, which will become effective on January 1, 2018.

Summary of the Amendments

Below is a summary of the amendments to the LRs contained in the Policy Statement. The changes consist of technical amendments to existing rules, the reordering of rules in chapters and the publication of technical notes that provide further guidance regarding the interpretation of the rules.

Clarification of the premium listing eligibility requirements in LR 6 - LR 6 sets out the requirements an applicant for a premium listing has to comply with in order to qualify for a premium listing. Below is a list of amendments that the FCA made to LR 6 in order to provide greater certainty as to what is required. The term "new applicant" has been replaced with the term "applicant" in order to streamline the applicability of LR 6. The revised rules clarify that a company that is an applicant for a premium listing by virtue of being inserted as new holding company (topco) for an existing premium listed company will not necessarily be subject to LR 6 eligibility requirements unless it is, at the same time, entering into a transaction classified as a reverse takeover (LR 6.1.1.R(1)). LR 6 will also not apply to a company that is applying for admission of shares that constitutes a further issuance of shares of the class already listed unless such issuance is undertaken in connection with a reverse takeover (LR 6.1.1.R(2)). An explicit statement has been added stating that any additional financial information (which may be required from an applicant where there have been acquisitions during the three-year financial track record period) will need to be audited (LR 6.2.4R). An explicit reference to a revenue earning track record has been inserted to highlight that only an applicant that has been generating revenues in its declared line of business for the past three financial years will meet the three-year financial track record requirement (LR 6.3.1.R(2)). A new technical note has been added that provides further guidance on the interpretation of the financial information, in particular the calculation of the 75%...