Capital Markets Group: PLC Update

The Financial Conduct Authority (FCA) created a premium listing category for Sovereign Controlled Companies in June 2018, which will create greater protection for investors and will encourage more companies to adopt the UK’s high governance standards, explains Bird & Bird.

Key amendments include:

• Eligibility requirements: For a company to be eligible for the new listing category, it must be 'a public company in which a State exercises or controls 30 percent or more of the votes able to be cast on all or substantially all matters at a general meeting of that company'.
• Transfer between categories: If a company fails to meet the eligibility requirements, the FCA must be notified and the transfer to a different listing category must be made. Failure to do this would result in a breach of continuing obligations to the FCA and the company may face being suspended and its listing cancelled.
• Depositary Receipts: The ability to list depositary receipts is attractive for foreign-incorporated sovereign-controlled companies, so they will now be eligible to list on the new premium category, provided certain specified criteria are met.
• Free float: The FCA has said that it will judge the free-float requirement in respect of depositary receipts on the basis of there being a sufficient number of depositary receipts in public hands to provide liquidity.
• Indexation: Companies listed under the new premium listing category will be eligible for inclusion on the FTSE UK Index Series if they satisfy the eligibility criteria currently in place.