A healthy wind from the British Islands - ECGS responded to the Consultation launched by the UK Financial Conduct Authority: Enhancing the effectiveness of the Listing Regime

A healthy wind from the British islands

In an impressive move the Financial Conduct Authority (FCA) has strengthened its listing rules to protect minority shareholders. The new rules will give shareholders in premium listed companies additional voting rights and greater influence over key decisions.

It is even more impressive to hear David Lawton, the FCA’s director of markets, saying: “Active engagement by all shareholders is essential to make markets work well. By safeguarding minority interests from abuse by controlling shareholders, these changes will promote market integrity and empower minority shareholders to hold the companies they invest in to account.”

The FCA has balanced these concerns with the feedback it received across the market to develop focused measures that strengthen the voice of minority shareholders, without turning minority protection into minority control.

The FCA’s enhancements to the premium listed regime include:

•Ensuring listed companies are run independently of their controlling shareholders, including measures that give independent shareholders a veto over transactions between listed companies and a controlling shareholder when this independence is threatened.

•Requiring separate approval of independent directors by independent shareholders, in addition to gaining approval from shareholders as a whole.

•Enhanced voting power for minority shareholders where a company with a controlling shareholder seeks to cancel its listing or remove minority shareholders’ rights.

•Requiring greater transparency for listed companies to ensure shareholders have the information they need to exercise their voting rights.

The same feedback also prompted the FCA to consult on additional enhancements to the listing rules. It intends to implement the full package of measures in mid-2014.

ECGS is very supportive of the FCA’s initiative and responded to the consultation. ECGS partners all welcome this initiative and drafted a common response to the consultation sent to the FCA on date of Tuesday, February 4th.

To read the full ECGS answer, click here.

To find out more about the consultation please visit: http://www.fca.org.uk/news/cp13-15-enhancing-the-effectiveness-of-the-listing-regime