FCA’s rules on listing sovereign-owned companies ‘bad news' for London

Added 13th July 2017

The Financial Conduct Authority’s (FCA) proposals to make it easier for state-owned companies to publicly float in the UK has been branded “bad news for London” by Royal London Asset Management.

FCA’s rules on listing sovereign-owned companies ‘bad news' for London

The watchdog has today launched a consultation on proposals to create a new category within its premium listing regime to cater for companies controlled by a shareholder that is a sovereign country.

It has proposed enabling such companies, which may the subject of major privatisation transactions, to choose the higher standards of premium listing, rather than standard listing. 

The new premium listing will include two modifications to the existing premium listing and exempt companies controlled by sovereign states from meeting certain requirements.

Andrew Bailey, chief executive at the FCA, said: “Refining the listing regime in this way would make UK markets more accessible whilst ensuring that the protections afforded by our premium listing regime are focused and proportionate.”

But industry figures believe that if approved the proposals will pave the way for the controversial floatation of Saudi Aramco, the $2trn Saudi Arabian oil company, on the London Stock Exchange.

In May, Saudi Arabia deputy crown prince Mohammed bin Salman, announced the country’s intention to float around 5% of the company in 2018.

Ashley Hamilton Claxton, corporate governance manager at Royal London Asset Management, said it looks like the FCA is seeking to amend the rules to accommodate the “peculiarities of one company”.

“If the proposals in this consultation document are implemented, it will be bad news for London and will reverse the progress we have made in recent years to uphold strong governance and protect minority shareholders,” she added.

“In our view, the listing rules should apply for any premium listing, regardless of whether the controlling investor is a private individual, a consortium or a sovereign state.”

Elsewhere, Chris Cummings, chief executive at the Investment Association, stressed the importance of investor protection in the new sector.

“Investors believe, a premium listed segment without these investor protections is not a premium segment and will not provide the protections that investors expect.

“It’s vitally important we maintain a good flow of high quality and well-run businesses from across the world, coming to list on the London market. The UK must offer a competitive market structure in light of competition faced from other markets.”

 

 

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About Author

Sebastian joined Last Word Media in 2017 as editor of Portfolio Adviser. He previously spent 10 years as a journalist and editor in the UK institutional investment sector, most recently as editor of Portfolio Institutional. Prior to that, he held several roles at Professional Pensions which is part of Incisive Media.

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