FSA publishes final rules relating to premium and standard listing regime

On 26 February 2010, the FSA published the final amendments in connection with its review of the listing rules ("LR") to be implemented on 6 April 2010.

These included feedback and confirmation on the following final points upon which the FSA had been consulting:

• Overseas companies with a premium listing will be required to offer rights of pre-emption unless they have obtained shareholder approval to disapply those rights. They will not, however, be required to comply with this requirement until 5 April 2011 to enable a transitional period for those companies to update articles of association or equivalent constitutional documents at their next AGM.
• As a condition to admission to the Official List, equity securities will need to be admitted to trading on a regulated market. Currently, listed equity securities must be admitted to trading on a market for securities of a recognised investment exchange (RIE), but it is not specified that this must be a regulated market. Securities to be listed under LR4 (such as on the Professional Securities Market) will remain subject only to the obligation to be admitted on a RIE market.
• Only equity shares that allow the issuer to meet all the "super equivalent requirements" will be able to have a premium listing. Securities that do not meet such requirements (for example, because they do not carry voting rights) will fall into the standard listing segment.  Those equity securities with an existing primary listing before 6 April 2010 which do not meet all those requirements may retain their premium listing until 31 May 2012.
• A new transitional provision has been added to confirm the intention that the new obligation for overseas companies to comply with the Company Reporting Directive requirements set out in LR 9.8.7A and LR 14.3.24 will apply to financial years beginning after 31 December 2009.

Lawyers Lee Bagshaw

Background

On 6 April 2010, the current primary and secondary listing regime will be restructured into two new segments - 'premium' and 'standard' - creating a level playing field for UK issuers, who will have access to the Official List (through the standard segment) without needing to satisfy the UK’s super-equivalent requirements. From last October, UK companies joined overseas companies in being able to opt for a secondary listing instead of a primary one, even if they do not have a primary listing elsewhere.

A premium (or primary) listing is only available to equity securities issued by commercial companies and closed and open-ended investment entities. Issuers will continue to be required to meet the UK’s "super-equivalent requirements", which are higher than the EU minimum requirements.

"Super-equivalent requirements" (which will not apply to a standard listing) include a three year track record, unqualified working capital statement, shareholder approval for cancellation of listing, appointment of a sponsor for key transactions, shareholder approval for class 1 and related party transactions, restrictions on terms of share buy-backs and additional announcement requirements.

Premium listed overseas companies will, from the relevant year after 6 April 2010, be required to "comply or explain" by reference to the Combined Code. Corporate governance reporting requirements for standard listed overseas companies will also increase if they are not already caught by corresponding EEA requirements.