The Financial Conduct Authority (FCA) has introduced significant changes to UK's listing rules, with the aim to make UK’s financial markets more accessible, efficient and attractive. The new rules will be in effect from 29 July 2024.

The key changes detailed below, with a focus on financial preparation implications for companies, have been introduced by the FCA to achieve its objectives of improving the attractiveness to investors of the UK equity capital markets:

• Replacing the current premium and standard listing segments into a single segment for equity shares in commercial companies referred to as "equity shares (commercial companies)" or “ESCC”. The AIM market, operated by the London Stock Exchange, remains unaffected by these changes. This promotes inclusive eligibility for smaller and high growth companies which may have been previously unable to enter the UK capital markets due to the stringent requirements for a premium listing. Importantly, all listed companies are subject to the same high standard of disclosure and governance, ensuring robust investor protection across the board. 
   
• Removal of mandatory votes on significant transactions and related party transactions for commercial companies and moving to a more disclosure based regime. However, if the transaction includes issue of new shares, a publication of a prospectus and therefore preparation of the relevant financial information might still be required under the prospectus rules (which are currently under consultation). Furthermore, shareholder approval will still be required for major decisions including reverse takeovers and delisting. This will streamline decision-making and enhance companies' agility to respond to market changes and opportunities. Additionally, companies will benefit from lower transaction costs by avoiding the preparation of circulars for shareholder votes.
   
• Relaxed eligibility criteria for companies seeking to list in the UK including more flexibility for dual shares structures, reduction of free float held by public at the time of listing and removal of previous premium listing requirement to demonstrate three year revenue track record and a clean working capital statements. The reduction in free float and any enhanced voting rights will enable founders and early investors to retain greater control and ownership of the company post IPO- ensuring alignment with the company’s strategic direction.
   
• Increased flexibility on listing rules for SPACs and shell companies whilst ensuring investor protection. This will improve SPAC attractiveness as a listing vehicle in the UK market.   

This reform followed an extensive market consultation, with the FCA balancing an increased risk tolerance necessary with a need for economic growth.