In July last year, the FCA consulted on proposals aimed at encouraging such companies to choose the higher standards of premium listing, rather than standard listing. The FCA thinks there is considerable benefit to investors if corporate issuers agree to meet these additional premium requirements.
In light of feedback received to the consultation, the FCA agrees with certain points made and is taking forward the proposals with refinements to ensure the regulatory requirements are suitably tailored to achieve the best outcomes for investors and issuers alike. The FCA is therefore including requirements in the category in the following areas.
- Independent votes on independent directors. This requires the election of independent directors to be subject to separate approval by independent shareholders. As for all other Premium listed companies, where independent shareholders do not vote in favour of the election, the requirement for a 90-day cooling off period after which the election can proceed without the separate vote of independent shareholders will apply.
- Disclosure obligations on related party transactions beyond Market Abuse Regime disclosures. In effect this would mean timely disclosures on transactions between the sovereign and the issuer.
Two remaining key modifications to the requirements for companies in this category in the final rules are:
- The absence of an advance sponsor ‘fair and reasonable’ opinion and prior shareholder approval requirements for related party transactions with the sovereign before these transactions are completed.
- For some sovereign controlled companies, the number of transactions makes this a disproportionately onerous requirement. The requirement for disclosure of the transaction on agreement will remain.
- The exemption for the sovereign from the requirement to enter into a controlling shareholder agreement with the issuer.
- Past experience has shown that these agreements can be impracticable for sovereigns and disclosures in the prospectus and the wider information available regarding the relationship between the sovereign and the company support investor understanding of the relationship.
