The UK listing regime: second tranche of the FCA's proposed new rulebook

March 13, 2024

As anticipated, the FCA has published the second tranche of its proposed new sourcebook for the UK listing regime.

In December 2023, the FCA published its Consultation Paper Detailed proposals for listing rules reforms (CP 23/31) (the December Consultation). This included:

• the FCA's detailed proposals for the reform of the current Listing Rules, of which the key element is a new commercial companies category for equity shares to replace the current premium and standard listing segments; and

• the first tranche of the draft new Listing Rules sourcebook (the new UKLR).

While the December Consultation dealt with the entirety of the FCA's proposals for reform of the current Listing Rules, the first tranche of the draft new UKLR was primarily focused on the rules for the new commercial companies category.

The second tranche of the draft new UKLR deals with all remaining parts of the new UKLR, including the new transition category for existing standard listed issuers of equity shares that are not eligible for a different listing category.

With the second tranche, the first tranche has also been republished to form a complete draft instrument of the new UKLR. The FCA has also published a further draft instrument with proposed consequential changes to the other parts of the FCA Handbook.

Timetable

In the December Consultation, the FCA stated that it is working to an accelerated reform timetable and expects the new UKLR to go live early in the second half of 2024, with two weeks between publication of the final rules and implementation.

There have been no further timetable announcements, other than that the consultation period for responses on the second tranche and the consequential changes instrument will close on 2 April 2024 (i.e. later than the 22 March 2024 date which applies to the first tranche).

Key areas covered by the second tranche of the draft UKLR instrument

Commercial companies category

While most of the rules for the commercial companies category were included in the first tranche, there are some additions. In particular:

• former Premium Listing Principles 3 and 4 concerning the equality and proportionality of voting rights have been inserted as eligibility requirements;

• alleviations for sovereign controlled issuers have been added in relation to admission to listing (UKLR 5), continuing obligations (UKLR 6) and related party transactions (UKLR 8); and

• the transitional provisions for in-flight listing applications and mid-flight transactions have been included. So far as the latter are concerned, from the date on which the new Listing Rules come into force:
  • transactions will be classified in accordance with the criteria specified in the new UKLR rather than the current Listing Rules; and
  • those that remain in scope of the new UKLR requirements will not be required to comply with any obligations in the current Listing Rules sourcebook that have not been carried forward to the new UKLR but will, subject to some exceptions, have to comply in full with all relevant obligations relevant in the new UKLR.

All issuers

The Listing Principles (UKLR 2): The reformed listing regime is underpinned by a single set of Listing Principles which combines the current Listing Principles and Premium Listing Principles (except as mentioned above).

There is also some additional guidance on:

• Listing Principle 1 (taking reasonable steps to establish and maintain adequate procedures, systems and controls to enable compliance with obligations); and

• Listing Principle 2 (dealing with the FCA in an open and co-operative manner).

Other cross-cutting chapters: The second tranche also includes the rules:

• for dealing with the FCA and publishing information (UKLR 1);

• regarding the process for admission to listing (UKLR 20); and

• relating to suspension, cancellation, restoration and transfer between listing categories (UKLR 21).

Listing categories other than the commercial companies category: Rules for each of the listing categories other than the commercial companies category are included as set out in the table below.

UKLR 11	Closed-ended investment funds
UKLR 12	Open-ended investment companies
UKLR 13	Shell companies, including SPACs
UKLR 14	International commercial companies with a secondary UK listing
UKLR 15	GDR issuers
UKLR 16-19	Issuers with listed securities in the listing categories for non-equity shares, debt, securitised derivatives, as well as warrants and options
UKLR 22	Transition category issuers i.e. those LR 14 standard listed issuers that are not shell companies or secondary listed issuers but have listed equity shares (UKLR 22)
UKLR 23	Listing particulars relating to listing applications for debt securities on the Professional Securities Market

For key points on these categories, please see our previous post.

Sponsor rules: Additional rules have been added to UKLR 4 (Sponsors: responsibilities of issuers) and UKLR 24 (Sponsors) in relation to the sponsor requirements that will apply to the closed-ended investment funds and shell company categories.

Transitional provisions: In addition to the transitional provisions mentioned above, there are various other transitional provisions, including in relation to transfers between listing categories.