PS24/6: Primary Markets Effectiveness Review: Feedback to CP23/31 and final UK Listing Rules

Policy Statement
PS24/6
Primary Markets Effectiveness
Review: Feedback to CP23/31 and final UK Listing Rules July 2024

This relates to
Consultation Paper 23/31 which is available on our website at www.fca.org.uk/publications Email:
CP23-31@fca.org.uk
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Contents
Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 4
Chapter 1 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 6
Chapter 2 Overall feedback on the balance of reforms, the new UK Listing
Rules structure and supervising the new regime . . . . . . . . . . . . Page 22
Chapter 3 Commercial companies category – eligibility requirements . . . . . Page 37
Chapter 4 Commercial companies category – eligibility and continuing
obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 43
Chapter 5 Commercial companies category – significant transactions,
including financial distress situations . . . . . . . . . . . . . . . . . . . Page 57
Chapter 6 Commercial companies category – reverse takeovers . . . . . . . . Page 81
Chapter 7 Commercial companies category – related party transactions . . . Page 84
Chapter 8 Commercial companies category – further share issuances,
share buy-backs, other matters requiring a shareholder vote and circular content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 91
Chapter 9 Commercial companies category – annual reporting and
governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 97
Chapter 10 Approach to current premium listed categories: sovereign
controlled commercial companies and closed-ended investment funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 100
Appendix 1 Made rules (legal instrument – UKLR sourcebook)
Appendix 2 Made rules (legal instrument – consequential changes)
Appendix 3 Sponsor declarations and other forms (ie, the ‘Procedures, systems
Chapter 11 Approach to current standard listing categories . . . . . . . . . . . . Page 105
Chapter 12 Changes impacting all listing categories – eligibility and ongoing. . Page 119
Chapter 13 Suspensions, cancellations and transfers . . . . . . . . . . . . . . . . Page 127
Chapter 14 Implementation and transition arrangements . . . . . . . . . . . . . Page 129
Chapter 15 Role of sponsors in the new UK Listing regime . . . . . . . . . . . . . Page 137
Chapter 16 Consequential Handbook changes . . . . . . . . . . . . . . . . . . . . Page 141
Chapter 17 Cost benefit analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 142
Annex 1 List of respondents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 151
Annex 2 Abbreviations used in this paper . . . . . . . . . . . . . . . . . . . . . . . Page 154
and controls confirmation form’ and the ‘Issuer contact details form’)

Foreword
The UK’s capital markets are the engine room of our economy. They allow companies to raise capital, expand and innovate to grow. They provide investors, including pension funds, with investment opportunities that can benefit from that growth. The UK’s capital markets need to operate efficiently and competitively to thrive on the global stage and contribute to the growth of the country. That is why today we are setting out the final rules for a new, simplified, and more competitive UK listing regime. These rules and accompanying transitional provisions will take effect from 29 July 2024. Our aim is to encourage a wider range of companies to choose to list, raise capital, and grow in the UK, while maintaining high standards of market integrity and consumer protection. These reforms are the most significant changes to the UK’s listing regime in over 3 decades, which is why we have consulted so extensively, with two consultations in May and December last year. We engaged widely and listened carefully to the wide range of views. While there was broad consensus on the need for change to our regime and the importance of vibrant UK listed markets, we recognise there were diverging views. Having listened to all sides in this important debate, we do not believe the status quo is an option. The need for change is clear and widely acknowledged. The risk otherwise is that our regime falls increasingly out of step with those of other jurisdictions, making it less likely that companies eager to grow choose the UK as a place to list their shares. Our final rules for the new listing regime confirm a shift to a more disclosure-based approach, putting information in the hands of investors so they can make informed decisions. They remove barriers for listed companies by no longer imposing shareholder votes on significant and related party transactions, provide more flexibility on enhanced voting structures, and create a single, simpler equity listing category for commercial companies. At the same time, important protections have been retained, for example shareholder votes for reverse takeovers and cancellations of listings. We have kept in mind that investors already choose to put their money in companies listed outside the UK, where the costly obligations we are removing do not exist. We believe institutional investors have the ability and heft to steer the companies they co-own. What’s more, evidence does not suggest that UK-listed companies are valued more highly by investors because of the current regime. Our reforms emphasise the choices available to investors and companies, rather than the regulator making prescriptive, one-size-fits-all decisions. These reforms may mean investors change how they engage with companies, making more use of shareholder rights at law and other mechanisms to scrutinise boards and business strategies. The new listing rules will continue to operate within broader regulatory checks and balances that maintain high, internationally
regarded market standards. These include the market abuse regulation, disclosure and transparency, financial reporting and

prospectus rules. Company law and corporate governance standards also provide a wider framework that will continue to support good governance and conduct by issuers, and shareholder engagement. Following implementation of these final rules, we will continue to maintain robust oversight of our listed markets, and will take action where we see poor disclosure or serious misconduct. Our sponsor regime, which we are retaining and expanding to cover equity listings of most commercial companies, will remain a critical check, especially for newer business models. We have also listened to feedback on how we can support the sponsor function continuing to be balanced and proportionate. We will formally review our new listing regime in 5 years’ time to assess the impacts on all parts of the market, but will not hesitate to intervene earlier and use our supervisory powers if necessary to ensure market integrity or our other statutory objectives. Regulatory reform is only one of the changes required to reinvigorate the UK’s public markets. We have played our part. Others will need to consider what they too can do. We look forward to building these collaborative efforts to achieve a common aim of a worldclass UK market ecosystem. From the outset of our work, we have acknowledged that greater flexibility for companies to access our markets, and a wider choice of companies to invest in, comes with accepting the possibility of failures. We believe that the changes we are setting out today will better reflect the risk appetite the wider economy needs to achieve growth and promote a more diversified listed market. The reform of our listing rules is one element of our resolution to further strengthen the attractiveness of the UK capital markets, and we will continue to progress our work in support of that aim, including consulting shortly on the new public offers and admissions to trading regime. We look forward to continuing the constructive dialogue we have had with all parts of the market as the new UK Listing Rules come into force. We hope that everyone can now get behind these reforms with our shared common goal of advancing the attractiveness, competitiveness, and strength of the UK’s capital markets. Our work carries on, but the rules published today mark an important milestone on the ongoing journey of promoting growth and sustainable returns for all. Nikhil Rathi, Chief Executive, and Sarah Pritchard, Executive Director of Markets and International

Chapter 1
Summary
1.1 On 20 December 2023, we published detailed proposals to overhaul the FCA’s Listing
Rules (LR) in our consultation paper CP23/31. These proposals followed a prior consultation through CP23/10 in May 2023, and are part of our ongoing response to the UK Listing Review in 2021. Having conducted further extensive engagement and received feedback on our proposals and the wider impact they may have on the overall UK capital markets ecosystem, we are now confirming our final reforms.
1.2 This policy statement summarises the main feedback from the responses to CP23/31
and our further stakeholder engagement. It highlights where we propose to maintain or change our final approach and our rationale, and confirms the final policy position and rules for the new UK Listing regime (see Appendix 1 and Appendix 2). The new UK Listing Rules (UKLR) sourcebook will come into force on Monday 29 July 2024, when the current Listing Rules (LR) sourcebook will cease to have effect and will be replaced in its entirety by the new UKLR sourcebook. Transitional provisions are provided to avoid a cliff edge in requirements for certain issuers and clarify how ‘in-flight’ transactions should be considered in moving to the new UKLRs.
1.3 The feedback to and engagement on CP23/10 and CP23/31 established broad support
for a more streamlined and effective listing regime. There was support for a single and simpler category and for the extension of the role of sponsors to a wider variety of commercial companies. However, there remained a significant split in views on some of the key rules for commercial companies with listed equity shares, with a divergence in views on the overall strategic approach of moving away from ex ante controls, set by regulators, to a disclosure-based philosophy and system which puts information in the hands of investors so they can decide whether to invest.
1.4 We are guided by our statutory objectives and recognise the importance of the
listing regime in setting high standards that maintain market integrity and consumer protection. While our final rules maintain our overall strategic approach of moving to a disclosure-based philosophy, we have sought to ensure that investor protections remain in key areas such as reverse takeovers where prior shareholder votes will continue to be required. In our final rules we have also sought to specify clearly the types of disclosures that are required to support investor decision making, and have taken feedback from buy-side groups and other market participants on this. Our reforms seek, where possible, to remove disincentives for prospective issuers to choose a UK listing, as well as removing frictions to growth once listed, while continuing to place emphasis on disclosure and putting information in the hands of investors to inform their investment decisions. This final rule set is calibrated to UK markets and the feedback we have received from UK market participants, but also places the UK market on a more consistent and competitive footing with other international comparators.
1.5 Our final position is broadly as consulted on in CP23/31, with certain amendments as
set out in this policy statement. At the core of our final rules is the approach proposed in CP23/10 and CP23/31 to remove our current ‘premium’ and ‘standard’ listing segments

in favour of a new ‘commercial companies’ category for equity share listings. For this category, we have maintained the approach of not requiring votes on significant and related party transactions and being more permissive in relation to companies listing with dual class share structures (DCSS) or weighted voting rights, subject to amendments discussed below.
1.6 We will, however, continue to carry over other significant aspects of the continuing
obligations from our premium listing rules to the commercial companies equity shares category, including votes on reverse takeover transactions and cancellations of listing. We will also apply the UK Corporate Governance Code (UK CGC) to the new commercial companies category.
1.7 For commercial companies, a few areas where the final rules diverge from the proposals
in CP23/31, in response to the feedback received, include:

Adjustments to the timing and content of disclosures proposed in relation to
significant transactions – giving more flexibility on the timing and content of the disclosures that will be required for acquisitions that are significant transactions so as to ensure shareholders are notified and informed of certain information as soon as possible after terms are agreed, and certain further information as soon as possible and in any event by no later than the completion of the transaction. After completion, companies will also have to make a notification to indicate that the transaction has taken place.
Allowing institutional investors (ie legal persons) to hold enhanced voting rights to
ensure that they are not disincentivised from supporting pre-initial public offering (IPO) funding rounds or bringing companies to listing in the UK. But introducing appropriate protections to ensure these enhanced voting rights do not last in perpetuity with a new 10-year sunset for the exercisability of the enhanced voting rights held by these investors to ensure a degree of visibility and predictability to other shareholders and prospective shareholders.
Retaining a requirement that companies must be independent from any controlling
shareholder but seeking to support this through disclosures and requirements for directors to formally give opinions on any resolutions proposed by a controlling shareholder when a director considers the resolution is intended or appears to be intended to circumvent the proper application of the listing rules. We believe that these changes more appropriately enable independence rather than the proposal set out in CP23/31, which relied on issuers entering into a binding agreement with controlling shareholders instead.
1.8 In response to further feedback, we have aligned the closed-ended investment funds
category more closely with the commercial companies category, while focusing on protections for transactions relating to investment manager fees. For shell companies and special purpose acquisition companies (SPACs), we have broadly reverted to the rules that currently apply to these issuers (in standard listing), but have still set timelimits within which we expect an initial transaction to be undertaken and will require sponsors for all in this category.
1.9 We have carefully listened to the feedback and recognise that not all parts of the market
will agree with certain features of the final rules for commercial companies – principally our

decisions to have fewer restrictions on DCSS and to not impose requirements on issuers to seek shareholder approval for significant and related party transactions. However, we think the rules strike the right balance to seek to encourage more issuers to list or stay listed on our markets, while still ensuring market integrity and appropriate consumer protections are in place, when considering the wider regulatory and legal framework in the UK.
1.10 UK listed markets will remain the most transparent and regulated environment in which
a company’s securities can be traded and accessed by investors. We want to provide a robust but flexible framework to promote the growth and diversity of businesses on these markets while maintaining market integrity. We expect that market practice will develop around this new rule set, with investors making their own decisions on where to invest, and market negotiation or other industry-led mechanisms determining what standard market expectations and practice will be under the new regime.
1.11 We will, of course, be supervising this new regime closely. Sponsors, approved by us,
will play a key role and our focus on standards at listing will remain, as will our focus on market abuse and market oversight. We explain below our supervisory and market oversight approach to the new regime, which is primarily a continuation of applying robust scrutiny of new listing applicants at the gateway, supported by the sponsor regime, and ongoing oversight of market disclosures and conducts. We will consider using our full range of tools to embed good market practices as the new regime settles, although we will seek to limit issuing further guidance and encourage good judgement in the market as far as possible in the early stages.
1.12 We will carry out a formal post-implementation review in 5 years’ time to provide a
more holistic assessment of the impact of the new rules, both in terms of whether the benefits we intend have been realised, and if any concerns raised by stakeholders in responses to our consultations and engagement have crystalised. But we will not hesitate to intervene before then, if through our market monitoring, we identify issues which justify us using our supervisory and other regulatory powers to deliver our statutory objectives.
1.13 In Appendix 3 of this Policy Statement, we have included copies of certain revised forms,
including sponsor declarations, which we will make available on our website from 29 July 2024 onwards. We have also published in parallel a further Primary Market Bulletin (PMB), which consults on further updates to key Technical Notes, in relation to our expectations of sponsors. The latter related to ongoing engagement and dialogue we have had with sponsor firms around seeking to ensure proportionate market practices in complying with our rules. Finally, in relation to sponsors, we also confirm that rules made in April 2024 to amend sponsor competency requirements will be carried over into equivalent provisions in the UKLRs. What we are changing
1.14 We are making final rules to replace the existing LR sourcebook with a new UKLR
sourcebook. As part of these changes, we are removing the concepts of ‘premium’ and ‘standard’ listing, while retaining categories that describe and set rules appropriate to the type of security or issuer type.

1.15 While this policy statement summarises the most important aspects of our final rules,
it is not an exhaustive summary of the new UKLR. The new UKLR sourcebook is the determinative instrument and should be read in its entirety in addition to this policy statement to understand the full detail of our final rules.
Table 1: Summary of approach to final rules, UKLR reference and relevant Chapter
in this Policy Statement
Listing
Category or topic
Key features of final rules for the new UKLR Sourcebook (See final instrument in Appendix 1 for the full rules and guidance) Additions or changes from CP23/31 are shown in underline UKLR
Chapter
Where you can find more detail in this document Commercial companies (Commercial companies (equity shares) category) Eligibility

No listing requirements for historical financial
information, revenue track record and clean working capital statements, although prospectus rules will still require such disclosure.
Sponsor requirement for new applicants.
UKLR 5 Ch 3
Eligibility and continuing obligations
Controlling shareholders: Retaining a
requirement for independence from controlling shareholder, amended guidance on factors indicating non-independence, no requirement for a controlling shareholder agreement. New mechanism for directors to give an opinion on a shareholder resolution put forward by a controlling shareholder when the director considers that the resolution is intended or appears to be intended to circumvent the proper application of the listing rules. Maintain certain related voting controls.
Control and independence: No eligibility and
ongoing rules requiring that a company has an independent business and has operational control over its main activities.
Externally managed companies: Retaining rules
preventing externally managed companies from listing in this category.
Dual/multiple class share structures:
Permitting issuers to have dual/multiple class share structures at admission. Enhanced voting rights only to be held by specified natural persons without a time-based sunset clause, or pre-IPO investors that are legal persons subject to a maximum 10-year period after which enhanced rights should expire. Retained voting restrictions on certain matters, including dilutive transactions and cancellation of listing. UKLR 5 and 6 Ch 4

Listing
Category or topic
Key features of final rules for the new UKLR Sourcebook (See final instrument in Appendix 1 for the full rules and guidance) Additions or changes from CP23/31 are shown in underline UKLR
Chapter
Where you can find more detail in this document Continuing obligations

Significant transactions: No requirement for
shareholder approval but market notifications for transactions ≥25% in size (based on class tests), removal of the profits test and new guidance on what constitutes ‘ordinary course of business’.
Notifications: specific content for market
notification for transactions ≥25%, but not requiring financial information or fairness statements for acquisitions. Allowing certain items to be disclosed as soon as soon as possible after the information has been prepared or the company becomes aware of it postannouncement. Require a notification to confirm when a transaction is completed. No working capital statement or re-stated historical financial information required.
Related party transactions: No requirement
for shareholder approval, but market notification, sponsor fair and reasonable opinion and board approval at ≥5%.
Reverse takeovers: Continue to require an
FCA approved circular and prior shareholder approval for transactions ≥100% or involving a fundamental change in business.
Share buy-backs, non pre-emptive discounted
share issuances and cancellation: Retained shareholder votes.
Annual reporting: Comply or explain disclosure
against the UK Corporate Governance Code, reporting on climate related and diversity matters, and other annual disclosures currently required in premium listing rules. UKLR 7-10 Ch 5-9 Sovereign controlled companies
Provide certain alleviations for equity shares
of sovereign controlled issuers within the commercial companies category, while removing a separate category for these shares.
Removing the concept of ‘premium listed’
certificates representing shares in a sovereign controlled issuer (can be listed in UKLR 15). As above Ch 10

Retention of shareholder votes on material
changes to investment policies and management fee changes.
Other significant or related party transactions
aligned to rules for commercial companies (above).
Confirmed change to definition of independent
director.
UKLR 11 Ch 10
Open-ended investment companies category
Only consequential or minor changes to existing
requirements.
UKLR 12 Ch 11
Shell companies category
Enhanced eligibility requirement for shells
and SPACs to have time limit of 24 months to complete a transaction, but with additional flexibility to extend by 12 months up to 3 times subject to shareholder approval, which can be extended for a further period of up to 6 months in specified circumstances.
Require board approval of initial transaction as a
continuing obligation.
Revert to a guidance approach whereby larger
SPACs may voluntarily choose to put in place sufficient investor protections, so that the smooth operation of the market is not jeopardised, in order to avoid a presumption of suspension (similar to existing rules in LR 5.6.18AG).
Sponsor required in various circumstances (eg,
at admission and to support initial transaction (reverse takeover)). UKLR 13 Ch 11 International secondary listing category
For non-UK incorporated companies with another
listing on a non-UK market, subject to certain conditions, ongoing requirements effectively maintain standard listing rules. UKLR 14 Ch 11 Transition category
Closed category based on current rules for
standard listed shares.
UKLR 22 Ch 11
Non-equity and nonvoting equity, and other categories
Discrete categories for non-equity shares
(including preference and deferred shares) and non-voting equity shares, certificates representing shares (depositary receipts), debt securities, securitised derivatives, and warrants and miscellaneous securities.
Consequential or minor changes from existing
requirements.
UKLR
15-19
Ch 12

Require additional key contact details for
all issuers and guidance on access to issuer information, subject to minor amendments.
Board declaration at point of listing on systems
and controls.
Generally retain existing approach to other
general admissions requirements, suspensions, cancellations and transfers. 1-3 UKLR 20-21 Implementation • Retain 2-week period between final rules and date TP Ch 14 and transition rules apply. arrangements • Adjustments to transitional provisions to reflect changes in final rules for certain categories, and other minor clarifications. Sponsors • Sponsor regime applied to commercial companies, shell companies and closed-ended investment funds at application stage and on reverse takeovers.
Ongoing role limited to further issuance listing
applications with a prospectus, related party fair and reasonable opinions, or where issuers seek guidance, modifications or waivers to FCA rules (including on class tests).
Final rules already made to amend sponsor
competency to be carried over.
UKLR 4
UKLR 24
Ch 15
Consequential amendments
Proceeded largely as consulted on subject to minor amendments N/A - other Ch 16 The context of this policy statement Our consultations under CP23/10 and CP23/31
1.16 In March 2021, the UK Listing Review made 15 recommendations in relation to how
companies access and raise finance on public markets to ensure that the UK remains an attractive location for companies to list and grow. After the publication of the UK Listing Review in March 2021, we moved swiftly to respond to the recommendations. In July 2021 we published PS21/10 with final rules on strengthening investor protections in SPACs. In CP21/21, we consulted on targeted changes to remove immediate barriers to listing, make our rulebooks more accessible and to protect and enhance market

integrity. Following this, we implemented several targeted reforms to the current Listing Rules while also opening up a broader discussion on the purpose of the listed markets within the wider ecosystem of public markets, through PS21/22 in December 2021.
1.17 This was followed by DP22/2 in May 2022 and CP23/10 in May 2023, in which we sought
further views on how the listing regime could be adapted to ensure the value of listing is easier to understand, to promote broader access to listing for a wider range of companies, and to empower investor decision-making.
1.18 This process of policy consideration allowed us to identify and then filter down from a
long list of possible policy alternatives and explore, refine and assess more deeply the likely costs and benefits of these policy choices.
1.19 In December 2023 via CP23/31, we set out a detailed explanation of our proposals to
reform our current listing regime, building on the framework we previously proposed in CP23/10 and taking into account the feedback we received in response to that consultation and our extensive engagement with a wide range of stakeholders. It also set out, in Annex 2 to CP23/31, a cost-benefit analysis (CBA) on our full set of policy proposals.
1.20 Along with CP23/31, we published a proposed new sourcebook, to be referred to as
the UK Listing Rules (UKLR) to replace the current Listing Rules (LR) sourcebook in its entirety. A first tranche (tranche 1) of the proposed UKLRs was published alongside CP23/31 on 20 December 2023, and on 7 March 2024, a second tranche (tranche 2) was published as part of a full updated draft instrument containing tranche 2 alongside the original tranche 1 drafting to form a complete draft instrument for the full UKLRs, along with proposed transitional provisions and a separate consequential amendments instrument.
1.21 The consultation period for the majority of our proposals in CP23/31 closed on 22
March 2024, and the consultation period for responses on tranche 2 of the draft UKLR instrument and the consequential amendments instrument closed on 2 April 2024. The consultation period for our LR 8 proposals regarding sponsor competence closed earlier on 16 February 2024 and the relevant changes were made to the current LRs with effect from 26 April 2024 via Handbook Notice 118. At the same time, we confirmed the final technical note changes in relation to sponsor competence rules in LR 8 via Primary Market Bulletin 48. Engagement and feedback to CP23/31, and our subsequent approach
1.22 As with CP23/10, during our engagement on CP23/31, we sought feedback from current
and prospective issuers, a range of institutional investors and retail investor groups, asset managers, pension schemes, advisers, trade bodies, and other stakeholders. We supplemented the formal written responses with extensive face-to-face meetings, including at C-level and in a variety of settings. We also continued to engage with our panels, namely, the Financial Services Consumer Panel, the Markets Practitioner Panel, and the Listing Authority Advisory Panel. In total, we received 70 formal written submissions reflecting 62 different organisations or individuals. Non-confidential respondents are listed in Annex 1.

1.23 Feedback to CP23/31 is more fully summarised in later Chapters. It is clear from our
extensive consultations that issuers and the wider sell-side community view these as the most important reforms to improve UK competitiveness and promote growth in UK listed markets, while retaining transparency that supports market integrity and investor choice. There was strong, positive, cross-market support from the vast majority of respondents for moving to a single category for commercial company equity listings and a simplification of rules to promote UK markets. Many market participants believed the proposals would provide a material impetus to encouraging new listings, retaining current listings and promoting growth on-market (eg via mergers and acquisitions (M&A)).
1.24 Most pension schemes, asset managers, and certain trade associations expressed
a strong preference for having more restrictions on DCSS and retaining the current premium listing rules for ex-ante shareholder approval of significant transactions and related party transactions, and reiterated concerns over how the proposals may impact investors’ ability to engage and hold boards to account effectively. However, we received little evidence to demonstrate that these features currently result in a valuation premium accruing to UK listed equities or increased asset allocation.
1.25 Conversely, existing data shows a long-term trend of de-equitisation by UK pension
schemes and more global diversification away from the UK equities by UK pension funds and asset managers. Over the past 20 years, UK defined benefit (DB) pension schemes have tended to transition away from investments in UK equities to investment in fixed income products. Furthermore, as of 2021, 77% of UK asset manager allocations in equity were invested in non-UK equities, meaning that UK asset managers are increasingly investing in jurisdictions without similar regulatory provisions to the current LRs. Moreover, mandates linked to UK company equity indices could easily be tailored to remove issuers with particular characteristics, such as DCSS, should investors wish to avoid such exposure.
1.26 We published our CBA as part of CP23/31 and received limited comments or challenge.
In one instance, indicative figures were provided to us on potential costs to be incurred for undertaking additional due diligence at IPO, for issuers with DCSS, or on significant/ related party transactions. While these costs were not substantiated or detailed, even if accepted at face value they did not offset our estimates of potential benefits from reducing frictions on transactions. We have considered all of this feedback, and it has not materially impacted our CBA.
1.27 Premium listing under the current regime remains a choice for the company when
applying to list, since a company can alternatively elect for a standard listing. The key provisions set out for the new category for commercial companies are already permitted in standard listing.
1.28 We did not receive any direct representations in response to CP23/31 from a Committee
of the House of Commons or the House of Lords, or a joint Committee of both Houses. We have had an ongoing dialogue on our work with the House of Commons Treasury Select Committee, including in our regular hearings, as well as with the House of Lords Financial Services Regulation Committee.

Wider context
1.29 While these changes represent a significant moment in the evolution of the UK listing
regime, it is important to note that a wider set of UK market regulation remains in place to protect investors in UK listed markets. We have taken this broader ecosystem into account when finalising our rules.
1.30 The disclosure requirements under the UKLRs will complement other requirements that
already exist within our ecosystem, which include:

the Market Abuse Regulation (MAR), which requires ongoing disclosure of inside
information and provides a basis for action against misleading statements and delayed disclosure
annual and interim financial reporting required by our Disclosure Guidance and
Transparency Rules (DTR) which will continue to underpin disclosure in markets, and
the current UK Prospectus Regulation, which sets out whether and when
prospectuses are required, which will be replaced in due course by the new Public Offers and Admissions to Trading Regulations (POATRs) regime and our rules to support this, on which will intend to consult later this summer
1.31 We hold supervisory and enforcement powers in relation to these requirements, and
have dedicated, specialist teams monitoring and ensuring adherence. Civil and criminal penalties also apply for breach of such requirements, including under MAR and the Financial Services and Markets Act (FSMA).
1.32 Other investor protections are provided by UK company law which secures fundamental
shareholder rights and enables shareholders to hold management to account, including, for UK companies, the ability of one or more shareholders holding at least 5% of the voting shares in a company to propose resolutions at general meetings. There is no restriction on the type of resolutions that shareholders holding 5% or more can propose, which gives shareholders a significant ability to hold the companies in which they invest to account and challenge decisions made.
1.33 More widely, the Financial Reporting Council’s (FRC) UK Corporate Governance
Code (UK CGC) and Stewardship Code deal with relationships between investors and companies and promote additional transparency. The FRC’s recently updated UK CGC continues to provide a robust framework for good corporate governance practices, and to which our rules for commercial companies and closed-ended investment funds will continue to refer. We will consult on making consequential changes to the UKLRs at a later stage to reflect the 2024 version of the UK CGC.
1.34 The FRC’s Stewardship Code is an important feature of UK market practices in terms
of investor engagement with companies they invest in and extends to key service providers, such as proxy advisors. The FRC has commenced a review of the Stewardship Code and has already undertaken extensive stakeholder engagement earlier this year. The FCA is engaging with the FRC and recognises the value of effective stewardship to support high quality engagement between companies and shareholders as part of wellfunctioning capital markets.

The FCA’s supervisory approach and the sponsor regime
1.35 As set out more fully in Chapter 2, the FCA’s Market Oversight (MO) directorate will
continue to oversee our markets and provide a robust supervisory and enforcement environment to promote market integrity. This includes:

our gateway transaction review function that reviews and approves draft
prospectuses and accompanying applications for listing
our market oversight function which monitors the conduct of listed companies
and other primary market participants, promoting the transparency upon which trusted markets depend, and
our supervision of sponsors, whereby we will continue to apply an intensive
authorisation and supervisory approach to sponsor firms, based on the new UKLR sourcebook, while also working collaboratively with firms to ensure our supervisory messages and market practice are not disproportionately applied, including in areas such as record keeping
1.36 In relation to the last point, a new PMB published today sets out further Technical Note
guidance proposals relating to the sponsor regime. This follows continued engagement with sponsors since the start of the year, in parallel with our consultation.
1.37 Chapter 2 sets out the continued value we see in the sponsor regime under our new
UKLRs, particularly in relation to admissions to listing in the commercial companies, closed-ended investment funds and shell companies categories and certain other post-admission activities. We detail our final approach to sponsors below. Overall, the judgement and expertise of sponsors will continue to play a key role in supporting issuers and high standards in our markets. At the same time, sponsors are not intended to remove investment risk related to an issuer’s listed securities, and the assurance of a sponsor remains subject to a ‘reasonable steps’ approach. Outcomes we are seeking
1.38 In our 3-year strategy launched in 2022, we committed to seizing the opportunity to
further strengthen the attractiveness of UK capital markets.
1.39 We are seeking to establish a simplified regime that meets our objective to ensure
markets function well. In doing so, we seek to advance and balance our market integrity objective and our consumer protection objective. We have also had regard to our secondary international competitiveness and growth objective (SICGO).
1.40 As we acknowledged in CP23/10 and CP23/31, the listing regime is not the only
consideration, and perhaps not the primary one, in decisions made about when and where to take companies public. During our engagement, many participants have also acknowledged this. However, we also recognise the potential for regulation to impact the balance of such considerations, and the wider market sentiment.
1.41 We want to ensure that our rules promote efficient and effective primary markets for
companies accessing public markets for the first time and when raising further capital, and to ensure that investors have access to timely information to invest with confidence. We

want to ensure regulation can better meet the needs of issuers and investors in line with our commitment to strengthening the UK’s position in global wholesale markets. As we also set out both in CP23/10 and CP23/31, we are committed to doing our part in seeking to ensure that the UK’s listing regime is proportionate, competitive, and functions well.
1.42 Specifically, our move to a simpler, more disclosure-based listing regime with a single
commercial companies category that continues to promote market integrity is aimed at helping boost UK growth and competitiveness by making our regime more attractive to a wider range of companies, so they list and grow here. This should also provide greater opportunities for investors, while requiring disclosure so shareholders retain the ability to exercise stewardship and other rights to influence company behaviour. It also involves some re-balancing of risk for investors as part of ensuring the market overall supports the risk appetite the economy needs. A revitalised UK equity market should both ensure low-cost capital for issuers and improve investment opportunities for investors in UK listed securities.
1.43 Our aim is to secure an appropriate degree of protection for all investors, to ensure wellfunctioning markets, and that take into account international comparisons and changes
in global investor behaviour and preferences.
Measuring success
1.44 As set out in CP23/31, over time, we will consider the impact of our final rules by
monitoring:

The number and overall market capitalisation (value) of commercial companies
with UK-listed equity shares (both versus historic trends and relative to other markets) and levels of capital raising on UK listed markets.
The number of UK incorporated companies who choose to list overseas and their
reasons for doing so.
The development and experience of listing regulation in other main international
jurisdictions.
Trends in the participation of UK listed companies in global M&A including deal
values and deal volumes.
The development of the UK investor base compared with that of main international
jurisdictions.
The diversity in the types of commercial companies listing their equity shares in
the UK (ie, more technology or earlier stage companies) and raising capital on UK markets for listed securities.
Whether there is any increase in formal shareholder motions against companies
or their boards in relation to transactions that would have previously required prior shareholder approval under premium listing rules.
Data regarding notifications of potential misconduct made to the FCA along with
our own detection work, and assessing the quality of disclosures being made particularly in relation to transactions and any investor feedback on these.
The number of commercial companies de-listing their equity shares, and their
reasons for doing so.
The impact of other factors on listing decisions based on intelligence gathered
from our engagement with issuers, sponsors, and other stakeholders such as trade associations.
1.45 As noted elsewhere in this document, while we will monitor the new regime on an ongoing
basis and assess key indicators as above, we also intend to conduct a formal postimplementation review after 5 years to consider the overall impact of these changes. How it links to our objectives
1.46 As we stated in CP23/31 and above, these reforms are linked to our broader vision for
regulating the UK’s wholesale markets and our statutory objective of making markets work well, improving their efficiency and effectiveness, and thereby helping us protect and enhance the integrity of the UK financial system as a whole. We summarise our position below, but see CP23/31 for additional detail. Consumer protection
1.47 Our operational objective is to ensure an appropriate degree of protection for
consumers. Therefore, we have carefully considered how to balance investor protection with the opportunity for investors to access a potentially wider range of investment opportunities. By focusing on ensuring sufficient, timely disclosures, we seek to allow investors to make informed investment decisions and engage as shareholders with the boards of the listed companies they have invested in.
1.48 We recognise that these changes will place an onus on companies and shareholders to
find ways to engage effectively with companies without FCA intervention, and there may be greater reliance on engagement through other channels such as annual general meetings to express concerns. This may mean investors who previously invested in premium listed shares need to enhance their approach to due diligence and risk assessment. We have considered this as part of our CBA.
1.49 If certain protections no longer offered by our rules are viewed as important to certain
groups of investors, then there are still mechanisms by which markets can set such conditions or seek to influence behaviours using their market power at the point of their investment such that they are “baked in” protections for investors. For example, asset owners could make changes to their investment mandates, index providers could review inclusion criteria, or rules set by exchanges can cater for different risk tolerances or preferences. Market integrity
1.50 Our final rules seek to promote market integrity by ensuring timely disclosures that
support investors to make informed investment decisions and engage as shareholders with the boards of the listed companies they have invested in.
1.51 We are aware that providing access to a wider range of listed companies may result in
increased risk of exposure to individual company failure. This might arise because listed

commercial companies have a higher risk-profile at the point of initial admission to listing or companies may be encouraged to pursue riskier transactions post admission to listing if the prospect of a shareholder vote on the transaction is removed. Corporate failures could have consequences for overall market confidence and integrity. However, noting that a listing has never been a guarantee of the relative risks of an investment, overall, we consider such cases may be limited and are of the view that these risks are offset by the wider benefits for the market if we see a more diverse range of companies listing in the new commercial companies category and more investment opportunities.
1.52 As noted previously, we will continue to have a robust and well tested transparency
regime for issuers that will complement the new approach to notifications in the UKLR, including retained annual reporting disclosures in UKLR and the existing DTR and MAR requirements. These taken together should promote market integrity and ensure that investors receive timely and accurate information, which in conjunction with their own analysis, can inform their investment decisions. Competition
1.53 Our final rules aim to simplify choices for companies as they consider listing in the UK by
creating a single listing category for commercial company equity shares and reducing hurdles to remaining listed in the UK for issuers in this listing category. As we stated in CP23/31, in doing so, we aim to improve accessibility for companies looking to raise capital which should allow more competition and give investors access to more diverse investment opportunities on transparent UK public markets, as well as enabling UK regulated market operators and advisors to compete more effectively to attract and retain listed companies. Secondary International Competitiveness and Growth Objective (SICGO)
1.54 The Financial Services and Markets Act 2000 as amended by the Financial Services
and Markets Act 2023 requires us to consider the international competitiveness of the UK economy (including in particular the financial services sector), and its growth in the medium to long term.
1.55 We have carefully considered our final rules in light of other leading international
listing markets. While recognising regulation is only one factor in listing decisions by companies, our final rules remove certain aspects of our current regulation which we consider may create disincentives for companies to list in the UK vis-à-vis other international markets. Given global investors allocate capital across those other markets and with no clear evidence of a valuation premium for UK listed companies in light of these additional standards or of these additional standards being regularly used, we see no clear evidence to suggest the commercial companies category in our final rules will lead to reduced investor participation or valuations. We consider our final rules should deliver more proportionate regulation and enable our markets to be competitive in attracting listings and promoting growth of UK listed companies. This would in turn support the wider UK economy and returns for investors.

Equality and diversity considerations
1.56 During the period between the publication of CP23/10 and this PS, we continued to consider
the equality and diversity issues that may arise from our proposals and our final rules.
1.57 We do not consider that our final rules materially impact any of the groups with
protected characteristics under the Equality Act 2010.
Environmental, social & governance considerations
1.58 In consulting on and then finalising our rules, we considered the environmental, social
and governance (ESG) implications of our proposals and our duty under FSMA to have regard to contributing towards the UK’s compliance with its net-zero emissions target and environmental targets under relevant legislation. Maintaining high-quality disclosures from listed companies on the climate-related risks and opportunities they face is material to the ongoing effective allocation of capital, including for the purposes of the companies’ own transition and – by extension – the achievement of net zero across the economy. As a result, we consider that our finalised rules will assist in achieving the UK’s net-zero emissions target. Who this affects
1.59 Our final rules will affect:

companies currently listed in or considering a listing in the UK
existing and prospective investors in UK listed companies, including individual and
institutional investors
the advisory community that advises and supports issuers undertaking an IPO and
meeting ongoing obligations post admission to listing and trading, including existing and prospective sponsor firms, investment banks, law firms and accountancy firms
UK exchanges and operators of markets for listed securities, and
intermediaries who may facilitate, including providing execution and/or marketing
of investments to issuers whether at IPO or in secondary markets
1.60 The following will also be interested, among others:
trade associations representing the various market participants above or member
groups with thematic interests (eg, general capital markets, governance or stewardship etc), and
wider financial market participants, such as research analysts and index providers,
academics and other market commentators

Next steps
What you need to do next
1.61 Market participants impacted by these changes should read this policy statement
and the accompanying final rules instruments. These rules will also appear in the FCA Handbook on 29 July 2024, when they come into force.
1.62 Those current standard listed issuers whose listings will be assigned to the transition
category can apply from Monday 29 July 2024 to be transferred to the new commercial companies category under the modified transfer process explained in Chapter 14. These issuers should consult with their advisors, including a sponsor firm, in order to take this opportunity forward.
1.63 Issuers and sponsors can still approach us for individual guidance. However, as we
explain later, we will set a relatively high bar for guidance requests as we expect market participants to use their expert judgement in the first instance to develop appropriate market practices in line with the new rules. It remains the case that we will not provide guidance on a hypothetical or no-names basis. What we will we do next
1.64 As stated above, the instruments published today will come into force on Monday 29
July 2024, when the current LR sourcebook will cease to have effect and will be replaced in its entirety by the new UKLR sourcebook.
1.65 In time for market opening on 29 July 2024, the Official List will be revised to display,
in each individual entry, the new listing category applicable to the security listed. We expect these new values to be visible in our Electronic Submission System (ESS) from Friday 26 July. Table 2 setting out the final structure of the UKLR sourcebook including the listing categories is set out in Chapter 2. Each entry in the Official List will display one of these categories.
1.66 Prior to the publication of this policy statement, we wrote to all commercial companies
with a premium listing under LR 6 and companies with a standard listing under LR 14 to notify them of how their entry on the Official List would be shown, assuming we proceeded with the proposals in CP23/31. To support this exercise, we undertook a process to map issuers’ existing listings to the new categories in the UKLRs. As we are proceeding with the main UKLR categories as we consulted on, these notifications – subject to any changes discussed and agreed with individual issuers as a result of the dialogue – will form the basis for how securities will be categorised and displayed on the revised Official List.
1.67 We expect to deploy the required IT systems changes over the weekend of 26-28 July
2024. We will also release new and amended forms, checklists, and sponsor declarations
on our website from 29 July to align with the new UKLRs, and will withdraw equivalent documents linked to the current LRs. However, some of these amended forms are provided in Appendix 3 of this Policy Statement for reference.

Chapter 2
Overall feedback on the balance of reforms, the new UK Listing Rules structure and supervising the new regime
2.1 In this Chapter we describe the feedback we received on our CP23/31 proposals in
general terms, given we received broad commentary in a number of responses. We also note feedback and confirm our approach to the general structure and organisation of the UKLR sourcebook and categories, which will shape the new Official List. We also detail how we intend to supervise and oversee our listed markets going forward. Feedback on the overall balance of reforms – focusing on commercial companies
2.2 In CP23/31, having set out the context and overarching approach to these reform
proposals, we asked:
Question 1: Based on our overall proposals for commercial companies, and taking into account the broader UK regulatory, legal and corporate governance environment, do you believe that we have struck the right balance in designing a proposed regime that enables the conditions for a stronger, more effective and competitive listed market with appropriate measures in place to support market integrity and investor protection. If not, what changes should be made?
2.3 Either in direct response to this question, or in general support to their submissions,
many respondents provided broader thoughts on the proposed changes either in place of, or as well as addressing the more detailed questions we asked about specific aspects of the proposed rules. These views primarily focused on the extent to which our proposed listing rule reforms would impact listing decisions by commercial companies (with an implicit focus on equity share listings), and general views on our proposed approach to the commercial companies category. We summarise these views here and provide a general response to certain key themes, although we expand further in later chapters on responses to specific rules.
2.4 The over-arching theme in responses was generally a split between:

investors and investor groups who expressed a very strong preference for
commercial company rules to retain premium listing provisions requiring shareholder approval of significant transactions and related party transactions, and greater restrictions on the terms of acceptable dual class share structures, and
issuers, banks and professional advisors that, generally, viewed the changes as
consulted on positively, and in particular saw the removal of premium listing votes

on significant transactions and related party transactions and a more permissive approach to DCSS as necessary to bolster the attractiveness of UK listed equity markets to companies and promote the competitiveness of UK listed companies in global M&A, with other flexibilities also potentially making it easier to do business as a UK listed issuer Key themes from investors
2.5 There was a high degree of consistency in responses received from pensions schemes,
asset managers, representative trade bodies and corporate governance groups to CP23/31 with those views provided to CP23/10. A few provided additional examples or cited studies to further support those views. We recognised the strength of feeling among these groups and sought to engage through in-person meetings at a senior level to hear those concerns first-hand as well as to discuss ways that investor protection could be achieved while retaining an overarching disclosure-based philosophy.
2.6 While we address specific areas of the rules in detail in later Chapters, some of the
overarching themes of investors’ responses were:

That the specific commercial companies category rules on DCSS and not including
shareholder votes on significant transactions and related party transactions would:
– undermine corporate governance over time and the UK’s reputation for robust investor protections, high standards, and a stable policy environment, particularly if boards become entrenched and less answerable to shareholders leading to a reduction in the UK market’s attractiveness to investors – reduce independent shareholders’ ability to influence the decisions of companies, in which they invest, and exercise effective stewardship, which for asset managers and pension trustees forms part of their fiduciary duty, particularly for minority shareholders – increase due diligence costs and potential investment risk, which may also lead to more price volatility due to valuation challenges, and – may, in aggregate, make the UK less attractive for investors and lead to changes in asset allocation and lower valuations and poorer outcomes for end consumers eg, beneficiaries to pension funds
That some of these factors, particularly related to issuers with DCSS, would be
exacerbated for investors in passive / index tracking strategies or smaller investors eg, since they may not invest or would have little influence on the terms set with an issuer at IPO, and yet would have to accept these risks if an issuer was included in any index or they invested as a later stage. Smaller investors would also have less ability to engage companies in lieu of shareholder votes and companies would have less incentive to engage them, and passive investors would have less opportunity to disinvest if constrained by their investment mandates.
That such changes may not be effective in improving UK markets, since other
factors outside regulation have far more influence over listing decisions, and changes may in fact have the opposite effect as high (premium listing) standards were a selling point to investors and so benefitted companies.
In addition, shareholders:

– Lack power to negotiate shareholder voting rights at IPO – the investment opportunity will be presented on a ‘take it or leave it’ basis. The company may still be investable, but the investment is riskier from the outset. – Lack opportunity post-IPO to engage and influence boards of companies they’ve invested in – company boards will reach out only to their largest shareholders when considering significant transactions – Lack power to ensure effective governance at board level and change composition – Have less capacity to absorb due diligence costs – Cannot necessarily predict board behaviour or decision-making, even where they are well-informed about the intended growth strategy for the company

That our case for change was insufficiently substantiated or relied on crossjurisdictional comparisons that didn’t account for other differences (eg, US litigation
culture and more onerous corporate law framework), and some of the mitigations we suggested may be ineffective or have undesirable effects. For example, relying on engagement with Boards and rights under company law in lieu of votes may be unrealistic or less effective, or might ultimately lead investors to take legal action in extremis and make engagement more adversarial, including on board appointments.
That the predominant view of those pension schemes and buy-side firms
responding was a preference to retain premium listing rules for DCSS and votes on transactions. Relatively few alternatives to our proposals were put forward otherwise. In the case of DCSS, a mandated maximum time period (sunset clause), usually c.5-7 years, or requirement for issuers to seek shareholder approval after a similar period in order to maintain a DCSS structure was the most frequent suggestion. For shareholder votes on transactions, no alternatives to a vote were offered nor did investors substantively comment on the disclosure proposed in lieu of a vote. A few responses alluded to minority views that a slightly higher threshold for such votes versus the premium listing thresholds and / or less required content in circulars supporting such votes might be acceptable. Overall, however, the views centred almost exclusively on retaining the vote. Key themes from issuers and the sell-side
2.7 Across the various parts of the sell-side, including issuers themselves or bodies
representing them, banks/advisors, and lawyers, there was similarly mostly uniform views on the overarching approach. Again, we engaged extensively to seek views first hand. The sell-side view was, generally, overwhelmingly supportive about the changes. They were more open to DCSS and moving away from ex-ante controls such as shareholder votes on transactions. They were generally opposed to time-limited sunsets on DCSS. The overall shift to a focus on disclosure that supports market integrity but giving issuers more flexibility around share structures and decisions over transactions once listed was welcomed. Some saw this as potentially transformative to the UK’s attractiveness in encouraging issuers to list in the UK. Others, while positive, felt regulatory change may not, in isolation, shift the likelihood of more UK listings given the many others factor influencing companies’ decisions on whether and where to list.
2.8 Given a general theme of support, many sell-side responses agreed with the related
rationale and analysis we had presented. Some added additional colour with examples

or noted the better alignment the changes would provide vis-à-vis other international markets such as the US or Amsterdam Euronext. Some respondents felt we could go even further in moving to streamline requirements, relying more on MAR for market notifications, including some opposed to maintaining shareholder votes on dilutive share issuance or cancellation. Controlling shareholder requirements were also raised (see more detailed feedback later on). Such responses pointed to the existing standard listing rules and felt there should be a very strong case to implement any standards that were higher than those in place currently for commercial companies given that standard listing is currently ‘acceptable’ from a regulatory perspective. Very few on the sell-side suggested adopting more of the premium listing regime when settling on the final rule set, with a single set of rules.
2.9 With respect to DCSS, existing and prospective issuers and advisors engaging with
those companies felt it was imperative to have flexibility, particularly in technologydriven sectors (eg fintech) where the corporate structures that tend to be put in place and used in these sectors can differ from other sectors. The wider variety of structures and terms DCSS could take for certain issuers – even if potentially including features like time-based sunset clauses – meant they welcomed the proposals set out in CP23/31 in general. Removing votes on transactions was seen as highly beneficial to existing listed issuers and in supporting UK issuers in global M&A as well as supporting issuers wishing to grow their business and be more attractive to companies with certain ownership or corporate structures. Our response:
We have carefully considered the wide range of views received on the balance of our overall reforms. In doing so, we remain focused on how to best achieve our statutory objective to ensure markets work well, key operational objectives to protect and enhance market integrity and secure an appropriate degree of consumer protection, and our secondary international competitive and growth objective. We welcome the general support for seeking to simplify our regime and removing the current two-segment model. Consistent feedback over several years, including in response to the UK Listing Review and our DP22/2, has been that the current premium listing rules are viewed as too onerous, while the standard listed segment is poorly understood. Index inclusion attaching to premium listing also makes standard listing far less attractive. Wider analysis presented in our previous document points to the long-term trend of declining numbers of UK equity listings and flat growth in the market capitalisation of UK listed companies. For these reasons, we have maintained the central premise of our reforms to move to a single, main category for equity shares in commercial companies and remove the concepts of ‘premium’ and ‘standard’ listing more generally from our listing regime. In terms of the specific rules for the commercial companies category, we have entered into extensive discussions with market and sought views across two consultations. We have listened to these views and

considered in detail the many thoughtful responses provided by different groups. We recognise why many investors have preference for key elements of our premium listing rules. However, we have also carefully considered the key trade-offs in terms of accessibility for issuers in moving to single equity segment and where regulation is necessary to address market failure – as distinct from market risk or securing specific investor interests. International comparators and data have also been considered alongside the arguments presented to us. We set out thinking on the specific changes below but, overall, we have concluded that the approach as consulted on in CP23/31 remains preferable in those key areas of votes on transaction and DCSS. While we take seriously arguments that the changes may reduce the attractiveness of investing in UK listed companies and may impact investors’ ability to hold boards to account, it remains the case that there is no discernible evidence that companies ‘benefit’ from our premium listed rules eg, such as additional shareholder approvals for transactions, in terms of better valuations, capital allocation or overall corporate outcomes. Instead, as noted above, there are long-running trends of UK pensions and insurance schemes de-equitising from UK listed companies, while UK assets under management in equities have seen a gradual reduction in UK exposures and an increase in global allocation. There is instead stronger evidence of the costs these provisions introduce, which supports views that such rules make the UK market less attractive for companies and may reduce the growth and returns of existing listed companies entering into such transactions, which ultimately passes back to investors. The absence of comparable rules in certain jurisdictions, in particular the US and EU, which are both markets which attract significant investment, suggest both that such standards are not pre-requisites to investment – nor, based on the continued credibility of those markets necessary to ensuring market integrity. Additional evidence provided since CP23/10 has been carefully considered, but has not materially changed the original CBA, as discussed further in Chapter 17. While one respondent did offer estimates of specific due diligence costs they felt may arise due to our changes, this was the only data point provided across two consultations. In practice, given many investors’ global activities and significant investment in markets which do not mirror the UK’s current provisions, which are likely based on common investment processes, we consider the lack of cost figures may reflect the fact this may be relatively marginal for many as they already account for different regulatory frameworks and focus predominantly on the fundamentals of a company. On balance, the potential benefits from reduced transaction costs and frictions from removing the requirement for votes still outweigh costs. We also still consider more flexible rules,
including on DCSS, may have incremental benefits for the attractiveness of the UK regime for prospective listings. We recognise that companies’ corporate governance models are an important consideration when investing. That is why we have consciously

maintained the link to reporting annually against the UK CGC in our rules for commercial companies, supporting transparency and accountability to shareholders. This also represents an uplift for companies versus our current approach for standard listed issuers. Existing high standards in UK governance practices and transparency on how the company complies with the UK CGC, in conjunction with investor expectations, should continue to push listed companies to adopt and adhere to suitable corporate governance models for their business – or see companies face a potential valuation discount, which would indicate markets working as they should. The Companies Act continues to apply duties to directors and give shareholder rights where companies are UK incorporated. In terms of stewardship, we acknowledge similar concerns about the impact of our reforms. In terms of no longer requiring certain shareholder approvals in advance, we note that voting is not the only, or necessarily the predominant, mechanism for stewardship. Some investors have told us that ongoing relationships and engagements with their investee companies are often their primary route for influence. Our focus has instead been to concentrate on ensuring timely disclosure to investors on the most material decisions transactions so that investors can exercise their broader stewardship and other influence to challenge decisions made by the board if appropriate. Our changes may lead to more direct engagement between investors and companies at the point of investment and around annual general meetings (AGMs), with an increased focus on company strategy and director appointments in lieu of votes on specific transactions. We encourage market practice to develop and want to see investors making use of the mechanisms that exist in the regulatory system as a whole. Companies continue to have commercial incentives, as well as corporate governance expectations and legal duties, to engage shareholders effectively and act in their interests as a whole. This includes engaging key shareholders ahead of major deals. Our rules also do not prevent companies choosing to offer binding or advisory votes on any matter, which may be further incentivised if this resulted in stronger shareholder backing and ultimately a valuation / market pricing benefit. We think, overall, that areas such as DCSS should be a matter of negotiation by markets and of investor preference as to whether they invest in such companies. We see global investors often accept such terms in large technology businesses in the US, and in our own current standard listed segment. We are not advocating for DCSS as a preferable model, but nor do we think regulation should set specific terms beyond our intention to ensure transparency and certainty as to holders of such shares at the point of IPO. That remains our starting position. A DCSS is unlikely to be considered by a majority of companies. While ‘edge’ cases with aggressive terms are possible,
perhaps where an issuer has strong demand for its shares at IPO, we think UK investor preference is likely to drive more acceptable terms such as sunset or review clauses.

Investors remain able to choose whether or not to invest or can always adjust their valuation where they consider DCSS may risk reducing longterm value. We note that tailored indices could also develop, for example to screen out DCSS companies if investors wished to have passive exposure to the UK market excluding such issuers. Investors will continue to have significant market power. Industry-led initiatives (perhaps in a similar model to the Pre-emption Rights Group) could be developed to set expectations for issuers as to when investors are more likely to invest (eg in relation to companies with DCSS) and we will watch how this develops as our rules embed. The FRC’s review of the Stewardship Code will provide an opportunity to consider what stewardship should address and its limits and we will input into that work as it develops. We do not think market-wide regulation should embed investor preferences or cater specifically to one type of investor. While accepting that regulatory change may not have a material impact on the immediate number of listings, overall we think our approach will make our markets more open. More diverse issuers, with different growth profiles and more opportunity to transaction on-market may help attract and scale more companies on UK public markets, as opposed to those companies going elsewhere or staying private for longer. We fully recognise the investors and the capital they provide are a vital component of a well-functioning capital market. We intend that our changes will widen but not drive investors choices. If, over time, we see clusters of new companies on UK listed markets in different sectors, this may drive a virtuous cycle of further benefits for both issuers and investors. For example, it may encourage more peer companies to list, attract more capital to be deployed, improve liquidity and price formation, and ultimately lead to more growth (and better returns) from UK listed companies over time. We will closely monitor the impacts of these new rules and have committed to a formal post implementation review in 5 years’ time. We will pay particular attention to cases of issuers coming to market with DCSS structures and existing issuers undertaking significant or related part transactions. We will be keen to continue to engage investors prior to and at this review stage to understand their experiences as well as learning from our supervision against the new rule set. Structure of the new UKLRs
2.10 Alongside the overarching question on our approach, in Chapter 3 of CP23/31 we also
outlined a general restructuring proposed for a new UKLR sourcebook, to replace the current LRs. This also reflected the proposed categories for different types of issuer and instrument.

Table 2: Summary of UKLR sourcebook structure
New UKLR Chapter Type Application
Cross cutting rules
UKLR 1 - Preliminary Overarching requirements All issuers including applicants Sponsor firms / firms applying to be sponsors UKLR 2 - Listing Principles Overarching requirements All issuers UKLR 3 - Requirements for listing: all securities All - Eligibility requirements All applicants for admission to listing (unless rule disapplied for certain applicant or security type) Sponsor- UKLR 4 - Sponsors: Shares - Rules for Issuers including related responsibilities of issuers issuers appointing a sponsor applicants in:

Equity Shares
(commercial companies) category
Closed-ended
investment funds category
Shell companies
category
Commercial companies category
UKLR 5 – Equity shares
(commercial companies):
requirements for admission to listing
Shares – Eligibility requirements
Applicants for:
Equity Shares
(commercial companies) category
UKLR 6 – Equity shares
(commercial companies):
continuing obligations
Shares –
Continuing
Obligations
Listed companies in:
Equity shares
(commercial
UKLR 7 – Equity shares companies) category (commercial companies):
significant transactions and reverse takeovers Shares – Continuing Obligations UKLR 8 – Equity shares (commercial companies):
related party transactions
Shares –
Continuing
Obligations
UKLR 9 – Equity shares
(commercial companies):
further issuances, dealing in own securities and treasury shares Shares – Continuing Obligations UKLR 10 – Equity shares (commercial companies):
content of circulars
Shares –
Continuing
Obligations

New UKLR Chapter Type Application
Funds categories
UKLR 11 – Closed-ended investment funds category Shares – Eligibility & Continuing Obligations Issuers including applicants in:

Closed-ended
investment funds category
UKLR 12 – Open-ended investment companies category Shares – Eligibility & Continuing Obligations Issuers including applicants in:
Open-ended
investment companies category
Equity or equity-like categories
UKLR 13 – Equity shares (shell companies) category Shares – Eligibility & Continuing Obligations Issuers including applicants in:
Shell companies
category
UKLR 14 – Equity shares
(international commercial companies secondary listing) Category Shares – Eligibility and Continuing Obligations Issuers including applicants in:
International
commercial companies
(secondary listings) category
UKLR 15 – Certificates Non-shares Issuers in and applicants representing certain – Eligibility & for:
securities (depositary Continuing • Certificates receipts) category Obligations representing certain securities (depositary receipts) category UKLR 16 – Non-equity shares and non-voting equity shares category Shares – Eligibility and Continuing Obligations Issuers in and applicants for:
Non-equity shares
and non-voting equity shares category
Debt and non-equity categories
UKLR 17 – Debt and debt-like securities category Non-shares – Eligibility & Continuing Obligations As per current application UKLR 18 – Securitised Non-shares As per current derivatives category – Eligibility & Continuing Obligations application UKLR 19 – Warrants, options Non-shares As per current and other miscellaneous – Eligibility & application securities category Continuing Obligations

New UKLR Chapter Type Application
Crosscutting
UKLR 20 – Admission to listing: Processes and procedures Regulatory process All applicants for the admission of securities UKLR 21 - Suspending, cancelling, restoring listing, and transfer between listing categories Regulatory process All issuers Transition UKLR 22 – Equity shares (transition category) (Closed to new applications) Shares - Continuing Obligations Existing standard listed issuers not eligible for UKLR 13 or UKLR 14 Other UKLR 23 - Listing particulars for professional securities market and certain other securities Listing particulars requirements As per current application Sponsors UKLR 24 - Sponsors Rules for Sponsor firms Sponsor firms Firms applying to be sponsors
2.11 In CP23/31, question 2, we asked:
Question 2: Do you agree with our proposed approach to structuring the UKLR Sourcebook chapters?
2.12 We received in the region 15 responses to this question. While we comment in later
Chapters on the listing categories themselves, in broad terms respondents agreed with the new layout of the new UKLRs and, in principle, with the categories. A couple did suggest bringing UKLR Chapters 20, 21 (both relating to regulatory process) and
Chapter 22 (relating to the transition category) nearer to the front. A small number
requested an updated origins and destination table (as published in Appendix 3 in CP23/31). Our response:
Given the broad support we have proceeded with the structure and naming conventions as proposed in CP23/31, as summarised in diagram 1 on pages 28-29 of CP23/31. UKLR 1 contains an overview of the sourcebook structure, providing the title and application of each UKLR
Chapter to help users navigate the new rules (see Appendix 1).
UKLR Chapters 20 and 21 are related to regulatory process and we have retained our proposed approach, which was to place these after the chapters concerning overarching requirements, eligibility requirements and tailored listing category requirements that are open to new admissions. Given that the transition category will be a closed category, and listings in this category may reduce over time, we consider it is

appropriate to have it toward the back of the new UKLR sourcebook structure. Therefore, we have not decided to re-order UKLR Chapter 20, 21 and 22 as suggested in some of the feedback received. As with our tranche 2 publication in March 2024, we have not updated Appendix 3 Handbook origins table of CP23/31. Our supervisory oversight of the new regime
2.13 Under the new UKLR regime, we will maintain robust checks on issuers applying to admit
securities to the official list, including prospectus documents, and ongoing monitoring of issuers’ compliance with the UKLRs, MAR and DTRs once listed. Our oversight will be based on our well-established supervisory model, which we will look to build on further by exploiting data and making better use of technology to enhance our capabilities.
2.14 The diagram below provides an overview of how the main pillars of our supervisory
oversight function and the tools we can and do apply in executing these functions. These will remain core to our oversight of the new regime, and we discuss further below these specific aspects and our likely focus as we embed the new UKLRs.

Diagram 1: overview of FCA oversight of primary markets Transaction review Sponsor Regime Primary Market Oversight The FCA’s Listings Department will continue to review prospectuses and applications for listing using a well-established review methodology Sponsors will continue to provide assurance to the FCA that transactions have been subject to expert scrutiny Our Listing Department carries out: Our transaction reviews include:

Review and approval of draft prospectuses • Background research on issuers and
and shareholder circulars directors
Review of eligibility for listing • Compliance with applicable conditions
Individual guidance for issuers where for listing
appropriate on UKLR and PRR • Consideration of whether investor detriment is engaged The FCA: Sponsor firms:
Approves and supervises sponsor firms • Must attest compliance annually
Has power to suspend, limit or cancel a • Are subject to sponsor competence rules
sponsor • Are monitored on conflicts of interest and transaction performance The FCA’s Primary Market Oversight (PMO) department will continue to monitor the conduct of companies and other primary market participants Primary Market Oversight carries out: Our actions include:
Live surveillance of primary markets • Real-time interventions
Thematic reviews and the publication of • Suspensions and cancellations
guidance • Investigation and enforcement
Ex-post reviews of market events
Policing of short and long position
disclosures

Detail on our supervisory approach and focus in the new regime
2.15 Across the areas noted above, our functions and intended focus as the new rules take
effect are summarised as follows.
Our Listings Department
2.16 Our Listings Department provides our gateway function, reviewing and approving
draft prospectuses and applications for listing (including reverse takeovers and initial transactions by shell companies) using a tried and tested review methodology.
2.17 Recognising the greater flexibility provided for admissions of equity shares in
commercial companies vis-à-vis our premium listing rules, our focus will be to ensure that prospectuses continue to provide, among others, adequate disclosures of an issuer’s business. In particular, in cases of companies seeking admission with dual class share structures or controlling shareholders, we will want to see clear disclosure in a prospectus, for example including the rights attaching to different share classes or any arrangements that are in place with a controlling shareholder.
2.18 At the same time, we expect that we will be considering applicants with different
business models and seeing a greater diversity of issuers within the parameters of the new rules. We welcome early dialogue with issuers and sponsors when considering listing so that we can provide guidance on the application of the rules where necessary. Our focus will remain on ensuring prospectuses provide investors with clear information on an issuer’s business, its prospectus and the rights attaching to the securities to be listed. Where companies seeking listing have dual class share structures, the prospectus should include clear disclosure on all of the issuer’s different classes of securities. Our Primary Market Oversight Department
2.19 Our Primary Market Oversight (PMO) department monitors the conduct of listed
companies and other primary market participants such as short and long position holders and regulatory newswires. PMO focuses on promoting the transparency that is a vital element of trusted markets. It employs and continues to develop monitoring tools and techniques using a range of data, intelligence and information to ensure that material information is made available to the market on timely basis. PMO engages proactively with a range of market participants and provides a range of guidance, including publishing results of thematic work, to help them understand and adhere to the relevant rules on an ongoing basis. Much of PMO’s work is undertaken on a live basis, where it intervenes to drive transparency via timely and accurate market disclosures. Where PMO suspects that misconduct has occurred, it will take action - which may include the suspension of the listing of a security, a targeted intervention to change behaviour and improve compliance or, for serious misconduct, enforcement action. Sponsors and sponsor supervision
2.20 PMO oversees the authorisation and supervision of sponsors. As discussed elsewhere,
sponsors will have a greater role as they will be involved in applications to the commercial companies, closed-ended investment funds and shell company categories – a greater

oversight function than currently since sponsors do not support the current standard listed companies. The judgement and expertise of a sponsor will be particularly critical if, as intended, we see a wider variety of issuers seeking to list in the UK, including some with limited track records. We remain clear that the sponsors’ role is not to remove investment risks for investors – there are also no changes on the expectation on sponsors to take reasonable steps in carrying out sponsor services (see also para 2.33). Going forwards, sponsors will play a role in related party transactions and reverse takeovers, and where issuers seek individual guidance, or modifications or waivers to our rules.
2.21 We will maintain an intensive supervisory approach to sponsors, and retain powers
to suspend, limit or cancel their authorisation. Applications to become a sponsor are subject to detailed review. We actively monitor sponsors - they must attest annually that they continue to meet our requirements and we will seek to test sponsor competence and understanding of the types of companies that they are advising. We have detailed processes to monitor sponsor performance, conflicts of interest and changes in sponsor businesses, and undertake proactive and reactive deep dive reviews on practices. We will continue this approach to sponsor supervision to monitor both continued compliance and ‘quality’ across the sector, as well as indicators of how competitive and effective the market is for sponsor services. We will particularly focus our reviews on newly approved sponsors and new applications for listing that make use of any new relaxations of eligibility requirements.
2.22 We are, however, also taking steps to ensure that FCA expectations of sponsors are
clear, in particular in terms of record keeping, so that these are well understood. As
part of this response, we have published a package of non-Handbook Technical Note
guidance alongside this Policy Statement to help sponsors achieve more practical compliance with our rules, while not lowering our expectations.
2.23 We will continue regular engagement to promote the role of sponsors, including
exploring communications for issuers to explain the role at an early stage when they are considering a UK listing. Such considerations include the FCA writing to the Board of a new applicant for listing to explain the importance of the sponsor’s role and explain how they can assist their sponsor. We are open to continuing our constructive dialogue and engagement via roundtables and will continue engaging with sponsors as the new regime operationalises to see how market practice develops. Supervisory engagement with market participants and further guidance
2.24 We recognise that these final rule changes represent a significant shift in some areas
of market practice. We are keen to have a collaborative approach to helping issuers and advisors as they seek to embed these changes with a view to setting market practices at the right level.
2.25 In line with this approach, we will not look to issue guidance in response to every request
as the new regime settles. As we are intentionally no longer approving disclosures for significant transactions, for example, we will seek to encourage market practice and sensible judgements by issuers and advisors to make appropriate disclosure to inform shareholders and the wider market. The overarching application of MAR will also be

a key consideration. We do, however, recognise that over time there may be some areas where revised or new Technical Note guidance may further support consistent standards or supplement areas of rules with more practical examples and we are open to considering this in future if needed.

Chapter 3
Commercial companies category – eligibility requirements
3.1 In this Chapter we describe the feedback we received on our CP23/31 proposals for
certain UKLR eligibility criteria for a company’s initial admission to listing in the new commercial companies listing category, and our response. This included consideration of whether we carried forward certain premium listing eligibility requirements in relation to:

financial information requirements
warrants and options to subscribe
pre-emption rights
externally managed companies
shares in public hands, and
shares of a third country issuer
Eligibility requirements for commercial companies – track record and financial information requirements Our proposals
3.2 In CP23/31 we proposed removing eligibility requirements related to financial
information requirements. This also included not requiring an unqualified working capital statement as a condition of listing in the new commercial companies category, in contrast to current premium listing rules.
3.3 This followed previous feedback to DP 22/2, which provided evidence that current
requirements were costly for companies listing on UK markets.
3.4 We proposed to not carry forward former premium listing requirements set out in LRs
6.2, 6.3 and 6.7, and associated rules for specialist companies in LRs 6.10,6.11 and 6.12. Feedback and our response
3.5 In Q3 of CP23/31 we asked:
Question 3: Do you agree with our proposed approach to eligibility requirements for commercial companies and the proposed draft provisions in UKLR 5 in Appendix 1?
3.6 Feedback was supportive of our proposal to remove historical financial information (HFI)
and track record requirements with 15 of the respondents supporting the proposal to remove HFI broadly compared to 6 who were against it.

3.7 Reasons given for supporting the proposals included that it would act to increase the
attractiveness of the UK listing market and allow a wider range of companies to list, including new companies without an extensive track record. Those supporting also noted the ongoing disclosure provided by the prospectus (see below), including the main buy-side trade association. Two of those opposed who represented pension schemes noted concerns about the loss of such information, which appeared to overlook the fact that a prospectus would still provide such financial information.
3.8 In respect of the feedback in relation to the removal of the requirement that issuers
have sufficient working capital for 12 months. Feedback was split between those supporting and those against. Among those supporting was the main trade body for asset managers, who agreed with our rationale that disclosure via the prospectus was sufficient, as well as the main sell-side trade associations. Three of the respondents supported removing the requirement from our listing rules commenting that we should also consider changing the approach to working capital statements in the prospectus. They suggested this could include a review of the binary nature of the qualified or unqualified working capital statement and whether issuers should be allowed to state their assumptions in preparing the statement.
3.9 Ten respondents in total, including the three noted above, made a link between our
listings rules proposals in this area and the need to retain the financial information requirements set out in the Prospectus Regulation when we consider the new public offers and admissions to trading regime, which we will consult on shortly. Three respondents also suggested that we should issue guidance for companies with complex financial histories on how best to meet the any revised rules relating to prospectuses. One respondent suggested that we should create a requirement akin to current LR
6.2.13 regarding the (recent) age of financial information in the new prospectus rules.
Our response:
We have considered this feedback and have decided to proceed with our proposals. The changes will provide more flexibility for different types of issuers to list and simplifies our eligibility requirements. Investors will still receive detailed historical financial information on the issuer, where it is available, via the prospectus. We note the points raised in relation to retention of financial information requirements in the new public offers and admissions to trading regime and will take that feedback into account when we consult on that new regime. We understand concerns which have been raised that, even if we remove the requirement for an unqualified working capital statement, it leaves a requirement on issuers to state whether the working capital statement is qualified or not in our prospectus requirements. We will consider whether or not we should make changes to the binary nature of working capital disclosures, including whether or not to allow issuers to include their main assumptions in the working capital statement, when we consult on the new public offers and admissions to trading regime later in Q3 2024. We still consider the exercise of assessing and disclosing the working capital position of a company to be important as issuers first come to market,

since it promotes market integrity and investor confidence by addressing potential information asymmetries. Our final eligibility rules for the commercial companies category are in UKLR 5. Warrants and options to subscribe Our proposals
3.10 We proposed in CP23/31 to not include specific eligibility requirements or restrictions
on number of warrants in the commercial companies category. We considered that this change (versus current premium listing) would give issuers more choice in their capital raising and allow investors more flexibility in how they choose to invest. Feedback and our response
3.11 We have only received minimal feedback. The feedback that we did receive was
supportive of our proposed change.
Our response:
We have decided to proceed as consulted on and so have not included specific eligibility requirements related to warrants and options for the commercial companies category. Pre-emption rights and shares in public hands Our proposals
3.12 We proposed carrying over for the purposes of the new UKLRs our premium listing
rules regard pre-emption rights and the requirement for 10% free float (shares in public hands) that applied to listings of both premium and standard listed equity shares. Feedback and our response
3.13 A number of respondents generally agreed to our approach to eligibility requirements,
without commenting specifically on pre-emption rights or free float.
3.14 One or two responses suggested that the FCA could go further and delete provisions
related to pre-emption rights for the new commercial companies category, applicable to overseas companies who are not subject to equivalent Companies Act requirements.

This small minority noted the fact that pre-emption rights are not necessarily common in other jurisdictions under company law or otherwise, and so this may pose a barrier for some overseas incorporate issuers considering a UK listing in this category. We also discuss this in Chapter 9 where we set out the feedback on our requirements for further issuances of shares after the company has been admitted to listing. Our response:
We have decided to proceed as consulted on with respect to pre-emption rights and shares in public hands provisions given general support. Our rules currently require overseas issuers to have provisions akin to preemption recognising they will not be subject to UK Companies Law. Otherwise, we view the principle of pre-emption to continue to be an important safeguard for investors to avoid dilutive actions, which was also emphasised in the Secondary Capital Raising Review final report in 2022. As with other areas in this Chapter, our final rules on eligibility are contained within UKLR 5, while corresponding ongoing obligations are in UKLR 6. Externally managed companies Our proposals
3.15 In CP23/31, we proposed to carry over the existing premium listing requirement in LR
6.13 to the commercial companies category, which requires the applicant to satisfy the
FCA that the discretion of its board to make strategic decisions has not been limited or transferred to a person outside the applicant’s group, and that the board has the capability to act on key strategic matters in the absence of a recommendation from a person outside the applicant’s group. Feedback and our response
3.16 A trading infrastructure provider commented that the removal of eligibility rules requiring
that a company has an independent business and has operational control over its main activities is a positive step. In their view, this should be mirrored by a decision to not carry over the eligibility and continuing obligations we have proposed to retain (in UKLR 5.2.1R and UKLR 6.2.28R) on externally managed companies, that reflect the existing provision in LR 6.13. They said that there are circumstances where a shareholder or a third party may have certain defined rights which may affect the ability of the board to make decisions, but are not relevant to the question of undue influence and control. This, in their view, should not be a bar to eligibility. What should matter is that these rights are clearly defined and disclosed, so that investors can make an informed decision.

3.17 A law firm suggested that there would be circumstances in which the market may need
further guidance, especially in the presence of novel business models and where certain functions are outsourced. Our response:
We have considered the limited feedback received and have decided to proceed with our proposal to retain provisions preventing externally managed companies from listing in the commercial companies category. While originally introduced to address the emergence of SPACs and their outsourcing of significant management functions to a separate advisory firm, which would typically place the real management of the company beyond a number of the key controls within the listing regime, the requirement in LR 6.13 plays an important role in delineating the boundary between commercial companies and other types of structures that we deem should not be listed in the same category. We provide further detail in the next chapter. We note that applicants will not be subject to independence or control of business requirements as they currently are, except when they have a controlling shareholder. Even then, we have narrowed the factors that may indicate that an applicant does not satisfy the requirement in UKLR 5.3.1R. We discuss this in more detail in Chapter 4. We expect that transparency should guide investors’ decisions, instead of regulatory requirements. Otherwise, we continue to consider that an issuer seeking to list equity shares in the commercial companies category should retain strategic control over its business and that such decisions are not limited or transferred to a third party outside the issuer’s group. This ensures the listed entity and its management remain responsible for compliance with our rules and we can hold them to account effectively. Our final rules are in UKLR 5 and, for corresponding continuing obligations, UKLR 6 (see Appendix 1). Other eligibility matters: Shares of a third country issuer Our proposals
3.18 We proposed to carry over the substance of the existing premium listing (LR 6.15.1R)
and standard listing (LR 14.2.4R) requirements, which provide that the FCA will not admit shares of an applicant incorporated in a third country that are not listed in the applicant’s country of incorporation or in the country in which a majority of its share are held, unless we are satisfied that the absence of the listing is not due to the need to protect investors. We said we were considering how we might clarify the wording of this provision to make it clearer. However, we did not propose any changes in tranche 2 of the UKLR instrument, as finding an alternative formulation without changing the meaning of the provision proved difficult.

Feedback and our response
3.19 We received a very small number of responses on this point. There was support for
seeking to clarify the existing provisions and a drafting suggestion for how this might be achieved. Our response:
We have considered alternative wording for these existing provisions, including the suggested wording provided in response to our consultation. However, we have concluded that any other formulation than the current wording is likely to change the meaning and, therefore, not possible. As such we have retained the existing wording in corresponding provisions across the following categories, to maintain the status quo:

commercial companies category
closed-ended investment funds category
shell companies category
non-equity shares and non-voting equity shares category
transition category (in the context of in-flight applications only)

Chapter 4
Commercial companies category – eligibility and continuing obligations
4.1 In this Chapter we describe the feedback we received on our CP23/31 proposals for the
UKLR requirements that apply as eligibility criteria for a company’s initial admission to listing in the new commercial companies listing category (UKLR 5) and as continuing obligations for that category (UKLR 6), and our response. This includes in relation to:

independence of business and control of business
controlling shareholder regime, and
companies with dual (or multiple) class share structures
Independence of business and control of business Our proposals
4.2 In CP23/31, we proposed to not carry over current premium listing eligibility
requirements and continuing obligations around independence of business (other than where a controlling shareholder is present) and control of business in the commercial companies category.
4.3 As noted in the previous section, we intended, however, to retain rules and guidance in
relation to externally managed companies.
We asked:
Question 4: Do you agree with our proposed approach to independence and control of business for the commercial companies category eligibility and continuing obligations? If not, please explain why and any alternative approach. Summary of feedback and our response
4.4 The vast majority of respondents, whether on the sell or the buy-side, were supportive
of our proposals, citing increased flexibility and welcoming this move as having the potential to promote the UK market as a home for a more diverse range of companies.
4.5 Three respondents were more cautious or against this proposal. These respondents,
all on the buy-side or representatives of asset owners, had concerns that the combined effect of having more complex corporate structures in place and removing the mandatory shareholder vote for related party transactions could lead to an increase in risks for investors, which could be damaging to the reputation of the UK as a listing

venue. They also expressed concerns that the absence of these eligibility standards/ continuing obligations could lead to ambiguity and lack of clarity and transparency, especially regarding governance structures and accountability mechanisms.
4.6 Various sell-side respondents, including some of their legal advisors and representative
bodies, raised concerns that a disclosure-based approach may place greater responsibility on sponsors in terms of the eligibility assessment and could present a challenge for sponsors in determining eligibility in the absence of specific guidance in this context. Some queried whether it is appropriate to outsource this responsibility to the sponsor without the provision of adequate guidance to support the sponsor in exercising its judgment.
4.7 Some respondents, including the FCA’s statutory panels – the Listing Authority Advisory
Panel and the Market Practitioner Panel, focused on transparency, and said that an applicant should be required to give disclosure in the prospectus where it does not carry on an independent business or exercise operational control over its business so that investors are able to make an informed assessment. A professional services company argued that there should also be a continuing obligation to require disclosure when an issuer’s status changes eg, where it ceases to control its business. Another respondent from the accountancy profession noted that the current prospectus regime already requires an applicant to make appropriate disclosure within the risk factors, material contracts and business overview sections of their prospectus. They argued that between these specific requirements and the application of the overarching necessary information requirement, there should be sufficient disclosure for investors to understand these aspects of an applicant’s business.
4.8 Emphasising the difference between dependence on a third party (for example, a
franchisor) and dependence on a related party (for example, a major shareholder as only customer) the same respondent commented that, while disclosures in the prospectus on both relationships should be clear and comprehensive, the related party nature of the latter relationship should increase sensitivity toward the level of disclosure, and hence challenge through the prospectus vetting process. They also said that, while the directors of the applicant have ultimate responsibility for the contents of the prospectus, the FCA should ensure they have sufficient resources and capability to provide effective challenge in such cases to ensure that their review process is an effective mechanism as part of ensuring appropriate disclosure. Our response:
Having considered the feedback received, we have finalised the rules as proposed. In response to concerns that sponsors may be called to perform additional work and take responsibility for decisions without the support of adequate guidance, we note that, where existing requirements in the LR sourcebook have not been reflected in the UKLR, the FCA does not

expect sponsors to ‘fill the gap’. For example, in the case of independence and control of business provisions. It is for the FCA to determine whether, in such cases, there might be risks of investor detriment given the specific characteristics of the applicant, recognising that it is not for the FCA to remove investment risk. The FCA will perform its own scrutiny of the information presented to it, conduct its own checks and may require a sponsor to provide additional information or confirmations. It will also rely on sponsors to notify it of any matter that in the sponsor’s reasonable opinion should be taken into account by the FCA when considering whether the listing would be detrimental to investors’ interests. As currently, the sponsor’s role in this regard is subject to the principle of reasonableness, with sponsor assurance provided after due and careful enquiry and sponsor services delivered in line with the principle of due care and skill. The FCA recognises that the exercise of judgement in this area requires sponsors to have a sound understanding of the FCA’s expectations. We expect to continue to discuss with sponsors how we can support them in providing their important role at the gateway.
Chapter 15 of this paper discusses the role of the sponsor in more detail.
We consider that the prospectus regime provides an adequate framework to achieve transparency around the specific governance arrangements that will impact who, when and how decisions are taken in a listed company. This information is crucial to investors and, as such, meets the necessary information threshold. As noted elsewhere, we will be consulting further on prospectus-related matters later in Q3 2024 as we propose rules to implement the new public offers and admissions to trading regime. We have not, at this stage, introduced a continuing obligation to require relevant disclosures when an issuer’s status changes eg, where it ceases to control its business. In some cases, such a change is likely to trigger existing disclosure obligations in any case. We will monitor the extent to which any additional guidance or requirement might be needed in the future. As we set out in Chapter 2 above, we will retain a robust market oversight function, with our Listings Department being responsible for conducting eligibility assessments for listing review, as well as vetting and approving prospectuses and, where still required, circulars. While we may take a closer interest in new applications using certain alleviations versus premium listing rules, we will use our existing review methodology and risk-based approach to assess such applications accordingly and ensure disclosures are adequate within prospectuses.

Controlling shareholder regime
Our proposals
4.9 In CP23/31, we set out an approach that would see the controlling shareholder (CS)
regime from our premium listing rules largely carried over in the commercial companies category, with the exception of consequential changes to take into account the proposals we set forward for significant and related party transactions. We asked (Q.5):
Question 5: Do you agree with our proposed approach to requirements relating to controlling shareholders for the commercial companies category eligibility and continuing obligations? If not, please explain why and provide any alternative approach. Summary of feedback and our response
4.10 We received several in-depth responses and engaged with a number of issuers and their
representatives post-consultation.
4.11 The buy-side was broadly supportive of retaining the current CS regime. At the same
time, the feedback from the sell-side, including current and prospective issuers, raised a number of concerns with the proposals, with a few companies following up with specific, practical issues with the proposed approach. Many sell-side respondents also queried why we had shifted from the more disclosure-based approach suggested in CP23/10, especially given the reliance on disclosure elsewhere in the proposed new regime. The more specific issues raised by those opposing the proposals are summarised below as four key themes.
4.12 Controlling shareholder agreements (CSAs) lack enforceability: while CSAs are
useful tools and can support independent directors and provide positive ‘signalling’, they are considered to lack practical enforceability from a contractual perspective. Given other changes to the listing regime, the finalised rules would not provide a ‘stick’ in the same way the current related party provisions do now. As the FCA cannot enforce a CSA because it is not a party to it, stakeholders have queried what the FCA would do in practice in case of breaches from a regulatory point of view – noting that FCA action to suspend or cancel an issuer’s listing may do more harm to minority shareholders. One respondent suggested that to address this issue we could apply the proposed requirements for related party transactions over a certain threshold to all transactions an issuer enters into with or for the benefit of a controlling shareholder. This approach would mirror current provisions in LR 11. By contrast, others felt this was a reason to not mandate agreements and rely instead on a more disclosure-based approach.
4.13 Eligibility or friction for certain issuers: we received feedback that the requirement
for a CSA to be in place at application in conjunction with the proposed independence requirement in UKLR 5.3.1R is likely to act as a blocker for prospective issuers and those wanting to transition having been admitted to listing in the standard segment. Some viewed this as inconsistent with the wider ethos of the new regime and queried whether disclosure of such arrangements would be more proportionate.

4.14 Factors relating to independence: Some felt that the guidance on the factors that might
indicate that an applicant is unable to demonstrate its independence from a controlling shareholder creates unintended consequences. We have received feedback indicating that two limbs of our guidance on ‘influencing the operations of the applicant outside its normal governance systems’ and ‘exercising improper influence’ (currently in LR 6.5.3G(2) and LR 6.5.3G(3), respectively) are considered ambiguous and problematic by some. This may be further exacerbated by the changes to other rules surrounding shareholder approvals. We were told that, absent requirements for shareholder approval for significant transactions and related party transactions, there would likely be an erosion of the ability of controlling shareholders to provide strategic direction to the company in a way that is both compatible with the guidance and does not force controlling shareholders to adopt measures that the market may see as too ‘muscular’, such as requisitioning meetings and shareholder votes, or forcing a change in the executive.
4.15 Risk of distortive effects and unfair treatment: Relatedly, some respondents
pointed out that, if, as proposed, wider independence of business requirements are not applicable to the issuer anymore because provisions equivalent to LR 6.4 are not carried over in the new regime, only controlling shareholders would be subject to such restrictions while independent shareholders would not. This, in their view, would appear to enshrine an inverse relationship between the level of a shareholder’s economic rights and the influence they are able to exert over an issuer. A shareholder holding fewer than 30% of the voting rights would not be subject to limits under the UKLRs to the rights they are able to exercise (which would likely be enshrined before an IPO takes place), while a controlling shareholder, with greater economic exposure to the issuer, would be limited as to what rights it could seek to implement. This imbalance could result in controlling shareholders being encouraged to sell down their shareholding to increase control, potentially to the detriment of the wider market, and / or could affect venue choice.
4.16 Some respondents from the legal community asked us to review the definition of
controlling shareholder in the light of the wider changes we have made to the Handbook, especially as regards the new rules for listed companies with dual or multiple class share structures. Our response:
Having carefully considered the range of views received and the likely effectiveness of our rules, we do not consider that the benefits provided by a CSA within the context of the new framework are sufficient to justify the corresponding costs. We have therefore decided that we will not impose a requirement for a CSA to be entered into between commercial companies and their controlling shareholders. We outline our reasoning below. In line with the broader policy outcomes we are seeking to achieve through these reforms, we want to ensure a wider range of business models can access the commercial companies category in order to raise capital and, as a consequence, investors have the option of committing capital to a wider investible universe in public markets in the UK. Without the optionality provided by the current rules of the standard listing segment, we recognise that a CSA would pose challenges to some

new applicants and existing commercial companies. We have explored these concerns through in-depth conversations with stakeholders and have concluded that there are risks in including requirements for a CSA without fully accounting for the unintended consequences that other changes to the sourcebook could lead to. While we will not require such agreements, many issuers will have such agreements already in place or choose to put them in place because they consider them useful corporate governance tools. We continue to support this and consider that they have a role to play as an expression of the freedom of contract between parties. Importantly, we also want to ensure that our rules are as clear and their application is as predictable as possible. We will retain a degree of discretion at the gateway, however, to refuse an application on the ground of investor detriment . We have decided to remove the proposed guidance, currently set out in LR 6.5.3G(2) and (3), around potential controlling shareholder influence over the operations of the applicant outside its normal governance structures or via material shareholdings in one or more significant subsidiary undertakings, or the ability to exercise improper influence over the company. This avoids the risk of ambiguity and confusion that it may create in conjunction with the other changes we are making. In the absence of regulatory requirements for CSAs and more streamlined guidance on independence, investors will have to determine whether the relationship between a company and its controlling shareholder(s) aligns to their risk appetite in the same way they have to consider other potential risks and opportunities. Traditionally, companies with controlling shareholders have not been as prevalent in UK public markets as in other markets where family-run issuers are more frequently found. We consider that the advantages they provide (eg, continuity, stability, long termism etc) and challenges they face (such as potential conflicts of interest and position of minority shareholders etc) are sufficiently well understood to allow investors to make informed decisions based, among other things, on their preferences, mandates and risk appetite. We would expect prospectuses to clearly set out the issuer’s capital structure, key shareholders and any key arrangements in place with a controlling shareholder to inform investors’ decisions in this regard. In finalising our rules, we have taken on board the suggestion that we should strengthen the mechanisms through which directors can challenge any shareholder resolution proposed by a controlling shareholder (or any of its associates) that a director considers is intended or appears to be intended to circumvent the proper application of the listing rules. Accordingly, we have introduced a provision in UKLR 6.2.10R which, where this is the case, requires that the circular accompanying the notice of meeting which contains the relevant shareholder resolution must set
out a statement by the board of the director's opinion in respect of the resolution.

As consulted in CP23/31, and reflecting the broad support from the buy-side respondents, we have decided to include substantially all other aspects of the current controlling shareholder regime, either as proposed, or with amendments that have been introduced to ensure that the rules work given other changes. In summary, where a company has a controlling shareholder, the controlling shareholder framework will entail:

A requirement (in UKLR 5.3.1R) for an applicant to demonstrate that,
despite having a controlling shareholder, it is able to carry on the business it carries on as its main activity independently from such controlling shareholder at all times and a corresponding continuing obligation (in UKLR 6.2.3R).
Guidance (in UKLR 5.3.2G and UKLR 6.2.4G) on factors which may
indicate that an applicant does not satisfy the above, focusing on features which may pose risks of catastrophic losses for minority shareholders, ie, i) a company granting security over its business to fund the controlling shareholder or a member of a controlling shareholder’s group, and ii) the applicant’s inability to demonstrate they can obtain access to financing other than from a controlling shareholder.
A requirement that the listed company must have in place at all times
a constitution that allows the election and re-election of independent directors to be conducted in accordance with UKLR 6.2.8R and UKLR 6.2.9R. These rules require that the election or the re-election of any independent director must be approved by both the shareholders and the independent shareholders of the listed company.
A requirement (in UKLR 6.2.35R) that a listed company must notify the
FCA without delay if it does not comply with any continuing obligation set out above.
Specific voting arrangements for the cancellation and transfer of
listing (in UKLR 21.2.8R and UKLR 21.5.6R). When this is the case, the resolution must, in addition to being approved by a majority of not less than 75% of the votes attaching to the shares voted on the resolution, also be approved by a majority of the votes attaching to the shares of independent shareholders voted on the resolution.
Requirements for disclosures in annual financial reports (UKLR
6.6.1R(9)) containing details of any contract of significance between the listed company, or one of its subsidiary undertakings, and a controlling shareholder as well as (in UKLR 6.6.1R(10)) details of any contract for the provision of services to the listed company or any of its subsidiary undertakings by a controlling shareholder, subsisting during the period under review.
A rule in UKLR 6.6.1R(13) that requires a statement to be made by the
board and included in the annual financial report that the company continues to comply with the requirement in UKLR 6.2.3R or, where the company has ceased to comply with that requirement, a statement that the FCA has been notified of that non-compliance in accordance with UKLR 6.2.35R. This statement should be accompanied by a brief description of the background to and reasons for that non-

compliance. Where an independent director declines to support a statement of compliance under UKLR 6.6.1R(13)(a), the statement must record this fact. Importantly, it should be noted that, beyond our rules, there are UK company law duties that require directors to exercise independent judgement and to act in a way that they consider, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole. In addition, the UK CGC provides guidance and sets standards relating to directors. The provisions in UKLR 6.2.27R(1) require that, where a shareholder vote must be taken in relation to certain matters set out in UKLR 9, UKLR 21.2 and UKLR 21.5, that vote must be decided by a resolution of the holders of the listed company’s equity shares that have been admitted to the commercial companies category. We do not consider the fact that approval of those matters is reserved to the commercial company’s listed shares means that shareholders holding enhanced voting rights will not be controlling shareholders when they control 30% or more of the votes able to be cast at general meeting. Accordingly, we have considered but have concluded that we do not need to revise our existing definition of controlling shareholder, which is “any person who exercises or controls on their own or together with any person with whom they are acting in concert, 30% or more of the votes able to be cast on all or substantially all matters at general meetings of the company.” We consider that the matters on which shareholders who have control through enhanced voting rights are able to cast their vote are all, or substantially all, the matters at general meetings of the company. We comment in the next section on how we consider controlling shareholders in the context of companies with enhanced voting rights shares, given the interactions between the two frameworks. Companies with dual or multiple share classes Our proposals
4.17 In CP23/31, we set out proposals for a more flexible approach to DCSS for the
commercial companies category. We moved away from the more structured framework we had initially contemplated in CP23/10 and most of the requirements we had proposed to introduce at the time, including a 10-year sunset for the exercisability of enhanced voting rights.
4.18 We set out instead a largely disclosure-based regime where investors would be able to
rely on the knowledge of the identity of the persons holding enhanced voting rights at IPO and on the predictability provided by rules that would restrict the ability to transfer those enhanced voting rights to other parties.

4.19 In line with this approach, we proposed to require that the constitutional arrangements
of a company seeking admission to the commercial companies category with a DCSS provide that specified weighted voting rights shares can only be issued to:
i. the directors of the applicant
ii. natural persons who are investors in, or shareholders, of the applicant
iii. employees of the applicant, or
iv. persons established for the sole benefit of, or solely owned and controlled by a
person in (i), (ii) or (iii) above
4.20 The company’s constitutional arrangements would also have to provide that a holder to
whom specified weighted voting rights shares have been issued would not be permitted to transfer the voting rights associated with such shares, except to a person established for the sole benefit of, or solely owned and controlled by, that holder. We asked:
Question 6: Do you agree with our proposals for allowing DCSS for companies listing shares in the commercial companies category and our approach to matters on which enhanced voting rights can be used? If you disagree, please explain or suggest alternative approaches? Summary of feedback and our response
4.21 Respondents from the buy-side were overwhelmingly against the introduction of
additional flexibilities around DCSS frameworks and largely opposed our proposals, favouring instead a significantly more limited form of multiple classes share structures and arguing in favour of a time-related sunset for the expiration of enhanced voting rights. These respondents provided additional examples of companies where DCSS has led to corporate governance failures and harm to minority shareholders.
4.22 Some of these respondents were sceptical about whether the market has effective
countervailing mechanisms that could ensure investors’ concerns are heard. These respondents maintained that investors don’t necessarily have enough sway at IPO to effectively influence the terms of an offer. Accordingly, some also said that FCA rules would be needed to even the playing field by introducing a requirement for a sunset of undefined duration to be agreed at IPO the length of which would need to be negotiated between the applicant and relevant investors.
4.23 Some buy-side respondents added that, should the FCA remain determined to
finalise the package without carrying over a time-related sunset clause, then the FCA should consider a ‘continuation vote’ which would give (independent) shareholders or shareholders holding the listed class of shares the opportunity to vote on removing superior voting rights and converting them into ordinary shares or to support the continuation of DCSS arrangements for longer.
4.24 Some buy-side respondents also recommended that if the FCA were minded to finalise
rules as per CP23/31, it should consider requiring disclosure of vote results on a class-

by-class basis, whereby companies with multiple classes of shares should be required to separately disclose vote tallies for each class. According to these commentators, this mechanism would give visibility to investors and boards as to the preferences of both those shareholders with enhanced voting rights (who may be more closely connected to the company) and independent shareholders.
4.25 Other respondents commented that the list of persons who can hold enhanced voting
rights has been extended beyond what is warranted. These stakeholders argued that the FCA should revert to previous positions and only allow directors to hold enhanced voting rights. Their view was that only those who are involved in determining the strategic direction of the company and are subject to director duties to act in a way that would most likely promote the success of the company for the benefit of its members should be allowed to have levels of influence that go beyond their financial interest in the issuer.
4.26 On the other hand, issuers and the sell-side welcomed the increased flexibility provided
by the revised proposals in CP23/31, and, in some cases, argued that more was needed. DCSS was viewed as particularly important for some groups of prospective issuers, such as more technology-driven businesses, including fintech. It was noted that since founders and pre-IPO backers of a company might be most influential in deciding where the company lists, the absence of optionality on DCSS – even if this may be constrained in practice once they engage investors – would detract from a listing venue, particularly given the US has no such restrictions and remains a strong ‘pull’ for new economy companies.
4.27 In terms of sell-side comments on areas of further flexibility on DCSS, their concerns
focussed broadly on 3 matters, which we discuss further in turn below, namely:

the types of persons who can hold enhanced voting rights
whether enhanced voting rights should be exercisable on all matters on which
listing rules require a vote to be taken, and
whether the non-transferability of enhanced voting rights is too restrictive
4.28 Based on current proposals, any pre-IPO investors who are not a natural person would
be unable to hold (shares with) enhanced voting rights. Some respondents, including issuers and potential issuers with which we engaged post consultation, said that this restriction would be problematic as early funding rounds typically see institutional and other early-round investors insisting on such rights being allocated to them. These respondents argued that the FCA should consider expanding the list of persons who can hold enhanced voting rights to include institutional investors but put a time limit via sunset clause after 5 years. One respondent suggested that enhanced voting rights should fall away where the holder faces a change of control during the relevant period. An issuer suggested that if the FCA were to introduce such a sunset in respect of institutional holdings of enhanced voting rights, such sunset should be “refreshable” or rather should run from the point of the relevant shareholder vote to approve it, as opposed to necessarily from the point of listing.
4.29 Some respondents argued that enhanced voting rights should be exercisable on
all UKLR-mandated votes. Those supporting this view did not provide an in-depth discussion of why they thought this was the case beyond arguing for a disclosure-based approach.

4.30 Some sell-side commentators cited the inability of enhanced voting rights to be
transferred (including though intergenerational transfers) as a factor that may disincentive listing in London in the context of family-owned companies with DCSS or companies where co-founders maintain a role in the business and may be inclined to transfer control to a fellow founder. Our response:
While we have carefully considered the significant feedback on this issue, and noting the strength of views from parts of the market, we have decided to:

proceed as consulted on in CP23/31 with regard to the type of natural
persons permitted to hold enhanced voting rights shares and limitations on transferability, while not setting a general time-based sunset or review clause for such holders, and
additionally, allow legal persons eg institutional investors to also be able
to hold enhanced voting rights shares, but, for this group only, we have applied both transfer restrictions and set a maximum time period of 10 years after which enhanced voting rights must expire We detail our further reasoning and considerations below. Time-based sunset or review clauses (for natural persons) As a starting point, we continue to consider that what share structure is appropriate and viable should be a point of negotiation between the company and its potential investors at the point of IPO. A company should be incentivised to create a share structure that is acceptable to the widest range of new investors, or it will face uncertainty around its capital raising or future share performance and liquidity. Our view remains that investors, who are under no obligation to buy shares in a company with a share structure that they do not like, have significant influencing power at the point of IPO. As noted in CP23/31, this has been demonstrated in practice by a number of companies that listed in our standard listing segment in recent years, where despite our rules setting no restrictions, models of DCSS included features such as time-based sunset clauses. We consider that the presence of DCSS and, if so, the terms of such shares, should be for companies and investors to agree on and there is no “one size fits all” answer to appropriate share structures. With regards to sunset clauses, we consulted on the basis that enhanced voting rights cannot be transferred except in specific circumstances. This automatically creates a natural sunset equivalent to the lifespan of the natural person who holds the enhanced voting rights. In response to feedback, we considered again our position on time-related sunset clauses but concluded that the new information provided by respondents did not significantly impact the cost-benefit analysis we set out in CP 23/31. Please see Chapter 17 for details on this. We also explored the concept of a ‘continuation vote’. However, we concluded that it would not meaningfully differ from a time-related

sunset in the eyes of founder-led companies, so may act as a barrier to considering a UK listing, and, as above, by regulating for this specific feature we would be intervening in setting terms between an issuer and prospective investors. We also anticipate potential complexity around such a mechanism given company law requirements. We therefore did not pursue that option. Expanding potential holders to include legal persons, subject to a 10-year sunset clause Having carefully considered the feedback provided on expanding the potential holders of enhanced voting rights to institutional investors who are already investors in the applicant company, we agreed this was a reasonable approach. The final rules thus widen the list of persons who can hold enhanced voting rights under our DCSS framework to include legal persons who, on the first occasion the applicant makes an application for the admission of equity shares to the commercial companies category, were an investor in, or shareholder of, the applicant. The same transfer restrictions as per natural persons would apply to legal persons as well (UKLR 5.4.5R(2)). Allowing the possibility for such rights to be provided to early-stage (pre-IPO) investors, which are available in other international capital markets, provides additional flexibility for issuers and investors to agree appropriate structures, and may encourage more companies to consider a UK listing. We consider this option would only be considered in relation to a limited number of institutional investors who, like founders, have "skin in the game" of the company’s success and earlier development, such that their interests should broadly align with those of other shareholders. As with all share structures, these holdings would be fully disclosed at the point of IPO. We are aware that some buy-side respondents who raised concerns about the breadth of potential holders set out in the previous narrower consultation may disagree with this approach. However, as above, we consider that disclosure through prospectuses will ensure investors are fully aware of the share structure at the point of an IPO and this information will allow them to make the appropriate investment choices based on their own risk appetite. However, as persons who are not natural persons do not have a finite life span, we have added a requirement to have a time-limited sunset for these rights to ensure that the enhanced voting rights cannot exist in perpetuity when held by a legal person. It also provides a degree of clarity and predictability at IPO on who holds enhanced voting rights at IPO. We decided a maximum 10-year ‘sunset’ clause for such holders would provide sufficient flexibility and capture the most benefits for new companies, while avoiding institutional holdings becoming perpetual. An exception is provided for enhanced voting rights held by a sovereign controlling shareholder.

We set the maximum period as 10 years for legal persons recognising the academic literature that indicates some, but limited, evidence for 7 years being the period of time in which the majority of the benefits tend to be experienced. Noting that we are hoping to encourage firms to enter public markets earlier in their journey, we felt that a 10-year cap would allow companies sufficient leeway to determine the optimal share structure within that limit. We note this is a cap and not intended as an anchor point. In general, we expect it may still be the case that companies choose to set shorter sunset clauses below the 10-year maximum based on the views of investors. We also expect, given institutional investors will likely need liquidity at certain points in time post-IPO, that the restriction on transferability may well mean such holders effectively relinquish those rights earlier than a time limit of up to 10 years. This is evident in some existing forms of DCSS seen in the market. Additional transparency measures We have considered the option of introducing a requirement for additional transparency that would allow class-by-class vote tallies to be disclosed, especially in the case of significant gaps in preferences (ie, above a certain threshold) between different groups of shareholders and where boards could be encouraged (or required) to formally respond to independent shareholders within a certain timeframe. In considering this, we have reviewed sections 341-354 of the Companies Act 2006 and Provision 4 in the UK CGC, which sets clear expectations around the transparency of voting outcomes for certain UK incorporated and for listed companies respectively. As stated in the response that suggested this idea, such a disclosure regime would likely require a standardised methodology for tabulation of votes to be agreed and, potentially, additional consideration would need to be given to disclosure data to be collated by a register which could build on similar experience of voluntary, market-led, initiatives. There are several aspects to this proposal for enhanced transparency and a degree of complexity attaching to it. We have not had the opportunity to explore fully how far this would add benefits beyond existing law and the UK CGC, as applied, at this stage. We remain open to considering its potential costs and benefits in due course and would welcome a marketled working group taking this forward to consider what would be possible and useful in this space. Other areas of feedback We have further considered our position on the proposed limitations to the exercisability of enhanced voting rights set out in UKLR 5.4.1R(1) and have decided to finalise the rules as consulted. Therefore, as is the case now for premium listed issuers, when the UKLR requires a shareholder vote to be taken, that vote would continue in most cases to be decided

by a resolution of the holders of the listed company’s equity shares, ie, holders of specified weighted voting rights shares will not be able to vote. In any case, founders and other shareholders who hold specified weighted voting rights shares will be able to influence the most strategic transactions that we propose would require shareholder approval, ie, reverse takeovers. They will also be able to vote to elect and re-elect independent directors. Conversely, where there is too high a risk of dilution or of other harms arising for ordinary shareholders, the rules do not allow the exercise of enhanced voting rights. Other amendments to the draft rules we consulted on have been made largely to effect consequential changes. Interested readers may also wish to consider related rules that reflect current premium listing principles 3 and 4 which are discussed in Chapter 12.

Chapter 5
Commercial companies category – significant transactions, including financial distress situations
5.1 In this Chapter we describe the feedback we received on our proposals presented in
CP23/31 on significant transactions and our response (we discuss reverse takeovers in
Chapter 6). We also address feedback to the related area of proposed disclosures where
such transactions arise due to an issuer being in financial distress or difficulty, including re-financing or reconstructions. These were addressed respectively in Chapters 6 and 7 in CP23/31.
5.2 Our final rules are in UKLR 7 set out in Appendix 1.
5.3 We also discuss related feedback that we received on existing guidance in DTR 2.5.7G on
selective disclosure. The adjustments we have made to that guidance are in Appendix 2. Significant transactions Our proposals
5.4 In CP23/31 we proposed a disclosure-based significant transactions regime for
transactions meeting the 25% threshold (based on retained class tests) without the premium listing requirement to seek prior shareholder approval for the transaction, with less onerous disclosure requirements and a reduced role for sponsors. We set out the key features of the proposed UKLR regime including the related sponsor role, and how it differed to the existing premium listing regime.
5.5 The specified purpose of the new regime was to notify shareholders of relevant
transactions and ensure that detailed information on the transaction is disclosed on a timely basis to support engagement between the listed company and its shareholders, and to enhance market transparency. The regime was intended to complement (but not supersede) MAR. It aimed to alleviate the existing concerns with the premium listing regime, while ensuring a consistent and predictable approach to disclosure that isn’t provided for in the standard listing category for shares. It would be mandatory to appoint a sponsor in circumstances where the company sought individual guidance from the FCA, or requested that we waive, modify or substitute rules in relation to the transaction. Listed companies would have more discretion on when and from whom to seek guidance on our rules, including from a sponsor firm, compared with premium listing requirements for appointing a sponsor.
5.6 We recognised that no longer requiring shareholder approval might potentially increase
risk for investors (if boards make poor decisions and do not take account of shareholder

concerns) but that on balance we felt reducing the cost and frictions of a vote for commercial companies outweighed these risks, considering also approaches taken in other markets. We discussed these issues in detail in CP23/31 along with the feedback to our earlier proposals for significant transactions in CP23/10. Summary of feedback and our response
5.7 Our proposals for a UKLR significant transactions regime were addressed in a
substantial proportion of the written responses and discussed at length in our further stakeholder engagements. We received around 30 responses on this specific topic, plus some additional respondents who responded more broadly on whether they agreed with our package of UKLR proposals as a whole (per Q2 as discussed above). Detail of responses
5.8 In Q7 of CP23/31 we asked:
Question 7: Do you agree with our proposed approach towards a significant transaction regime for the commercial companies category? Please provide any alternative views.
5.9 We received around 28 responses to this specific question from a range of stakeholders
offering diverging opinions.
5.10 We received 13 responses from issuers, the legal and sponsor community and a
range of sell-side trade bodies who strongly supported our proposal not to require a significant transaction to be subject to prior shareholder approval, for the reasons described in CP23/31. Within that cohort, there was a narrowly targeted point of dissent from one respondent who advocated for a shareholder vote on a large disposal (ie, at the 75% threshold on the class tests) where the disposal is not subject to the Takeover Code, but with no additional UKLR requirements. A shareholders’ association also supported our proposals.
5.11 We received 13 responses from institutional investors, buy-side trade bodies and
buy-side advisors who strongly objected to our proposal not to include the mandatory shareholder approval for a significant transaction.
5.12 Their concerns were aimed principally at governance issues at board level, noting that
the prospect of a shareholder vote could have a disciplining effect on directors. The vote might also protect shareholders and the value of their investment by giving them a veto power over the board. They told us the shareholder vote was an important tool (some described it as vital) for investors to carry out their stewardship duties and block harmful transactions before they could erode value. They did not consider an enhanced disclosure-based regime would make up for this change. These respondents viewed our proposal as a harmful dilution of long-established shareholder protection mechanisms that investors expect of UK markets and a decline in governance standards.

5.13 Some of these respondents pointed to case studies and academic evidence that
they felt supported their position. They noted it can be hard for investors to predict a company’s entry into significant transactions, even for those shareholders who engage regularly with its board and the board is not compelled to take their views into account. They highlighted the likely increased due-diligence costs for investors, and potential expense and other downsides of post-event actions aimed at holding boards to account, replacing directors, or seeking redress via litigation where deals have turned sour.
5.14 There was an indication from some that a nominally higher threshold for a shareholder
vote may be acceptable, although this was largely unsubstantiated, and to reduce the content requirements for class 1 circulars in premium listing.
5.15 The buy-side also pointed to inherent investment risks that attach to the specific
characteristics of the investor, ie, when they are a minority shareholder or a passive investor. These risks can come to the fore when a company enters into a significant transaction but may be mitigated by the premium listing requirement for the company to seek prior shareholder approval which enables them to participate in the company’s decision-making.
5.16 For example, a company would be unlikely to seek views from its minority shareholders
before entering into a significant transaction, whereas major shareholders might be consulted (subject to the company meeting its MAR obligations on delayed and selective disclosure). Hence there is a disparity between minority and major shareholders in terms of the information they hold (where the information hasn’t already been disclosed to the market) and their ability to influence the company. Or that passive investors have less choice than active investors in whom to invest and may have less option to dispose of their interests in a company (depending on the company’s index inclusion) when it enters into a significant transaction that it does not support.
5.17 Buyside respondents argued that the high standards of governance, ie, the shareholder
vote that is required in premium listing, makes the UK a more attractive listing venue for investors versus overseas markets. They challenged opposing feedback from others that it was a matter of concern for UK-listed companies or companies considering a UK listing. An academic who responded expressed a similar view. An investment organisation said that reducing governance standards may attract new listings but will lead to a secular rotation of capital away from the UK as international investors appraise market risk.
5.18 We received mixed views from Panels advising the FCA. Panel members drawn from
advisors to listed companies were, on balance highly supportive although with the occasional dissenting view from within the membership. Members with a ‘consumer protection’ remit strongly objected to proposals that they perceived to water down protections that might prevent loss of value to the ultimate retail investor (such as pensioners) from poor decision making by the company.
5.19 Reporting accountants (including their trade body) submitted 6 written responses offering
mixed views around the shareholder vote. Currently, they work with issuers and their sponsors in undertaking due diligence that supports them discharging their premium listing obligations on class 1 transactions, particularly around financial and working capital disclosures in shareholder circulars. While some reporting accountants agreed with

moving to a disclosure-based regime (we discuss their views on disclosure below), others urged us to retain the shareholder vote from premium listing but at a higher threshold.
5.20 We received 4 responses from exchanges and trading platforms and they supported
our proposals. However, they – alongside other respondents supporting the changes – agreed with us that broader reforms were also required to make a difference to the attractiveness of the UK-listing landscape. They also pushed the FCA to consider enacting other policy changes specifically aimed at encouraging a shift towards greater retail participation in UK equity markets.
5.21 There was some, but not overall support for retaining the notification requirements
for a transaction that would be classified as ‘class 2’ in premium listing (ie, where the transaction is at least 5% on a class test but each class test is less than 25%).
5.22 The key commentary on retaining the class 2 approach came from a trade body
representing the legal community advising issuers, and a trade body representing investors and a few other buy-side stakeholders.
5.23 The legal community commented that issuers will still be required under MAR to disclose
transactions that are not classified as significant transactions. In that context, market participants may prefer the retention of existing class 2 disclosure requirements (which are not perceived as overly burdensome for issuers) as guidance on discharging MAR obligations.
5.24 The trade body representing investors strongly disagreed with not retaining an
obligation in UKLR to notify transactions below the 25% threshold. They told us this was high risk for investors, as there are differences between the MAR regime and the current (premium listing) significant transaction requirements. They thought this would increase the risk that companies will be able to make substantial transactions without the full information being available to the market until a significant period of time has elapsed. Our response:
We have proceeded as consulted by finalising a disclosure-based regime for significant transactions that does not require commercial companies to seek prior shareholder approval for the transaction. In finalising our rules for significant transactions (at the ‘class 1’, 25% threshold), we have taken account of the strength and divergence of opinion on our proposals in CP23/31, whether set out in the written responses or offered during our extensive engagement with stakeholders. We recognise that this polarisation of views will inevitably mean that our policy decisions will not align with the views of some of our key stakeholders. In coming to this decision, we have considered carefully again the feedback on our proposal not to require a shareholder vote on significant transactions. We fully recognised the objections from buy-side stakeholders and engaged in various forum to discuss the issues, including

specifically arranged events. We are grateful they took the time and considerable effort to write and meet with us to explain their concerns. We accept that removing the pre-transaction general meeting to vote on a significant transaction takes away an attractive stewardship mechanism. We also acknowledge shareholders would prefer to retain what has been characterised in some responses as their ‘veto’ rights. The ability to ‘veto’ the board’s decision to enter into a transaction is viewed as a safety net by investors which can be used to reduce the perceived investment risk. Positioned ahead of the transaction, it avoids investors having to rely on other post-event remedial actions to seek redress. We agree that these changes versus premium listing are likely to impact investment risk. Removing shareholders’ ability to veto significant transactions places more emphasis on boards to make decisions that preserve or increase (rather than erode) shareholder value. However, the support for the vote by investors appears to be based on the premise that shareholders and boards are ‘on different sides’ and shareholders are better informed than the board on what delivers the best outcomes for the company and, by extension, shareholders. We note that the boards of UK-listed companies will continue to be answerable to their shareholders as a whole. Our changes do not alter the company’s obligations to its shareholders at law, nor the directors’ fiduciary duties. They emphasise that it is for the board to own its decisions and be transparent about the company’s significant transactions. Based on comparisons with other jurisdictions, our premium listing rules are an outlier in extending to shareholders the ability to have an overriding say over decisions that would ordinarily be taken by the board, particularly in markets where boards are expected to adhere to high standards of governance. We also do not extend these rules to standard listed issuers. It continues to be our view that, as with other major capital markets, it is for shareholders to use the tools available to them at law and via their stewardship channels to hold to account the companies they choose to invest in if these companies do not achieve the growth and financial returns that investors expect. Where boards do underachieve, there are mechanisms available to shareholders to seek to change the board’s composition. In addition, capital markets exist to enable investors to trade in and out of securities and take decisions that accord with their own risk appetite and the parameters of their investment mandates, based on information that our listing requirements, plus other rules and regulation, require them to put in the public domain. We also acknowledge the points raised by investors and other buyside stakeholders that minority shareholders will have less opportunity to express their views or influence companies ahead of a significant transaction in the absence of a shareholder vote, and that
passive investors have less scope to sell investments after the event, where

they are constrained by the terms of their investment mandates. We understand therefore why these investor types will feel they are more affected by the changes compared to major shareholders and actively managed mandates. We note, however, that imposing a shareholder approval requirement for significant transactions does not necessarily mitigate this risk, since eg, a large shareholder is more likely to get engagement with a company given their greater influence under a vote. Therefore, while we do understand the concerns, we do not agree that we should aim to mitigate them via prescriptive regulation nor that this is necessary in relation to our consumer protection or market integrity objectives. Where shareholders are concerned about shareholder rights, they can select (through their choice, mandate or tracking index) to invest only where these mechanisms are in place. We are aware that such professional investors will already monitor and adjust the risk weighting of their portfolios for a variety of reasons. If necessary, they will do so to take account of our changes to the listing requirements. We disagree with the inference that removing the mandatory shareholder vote from our requirements will result in a decline in corporate governance standards in UK-listed companies. While premium listing shifts the responsibility for a decision to enter into a significant transaction from the board to the shareholders, UKLR puts that responsibility back to the board. The board, as well as the transaction, continue to be exposed to shareholder scrutiny and boards can be held accountable through various mechanisms. Our rules do not prevent companies offering advisory or binding votes on any given transaction. We also consider that issuers retain a commercial incentive to engage shareholders prior to a transaction. We have clarified guidance in our DTRs related to MAR to assist issuers in this context (see the following section). We also received no direct challenge to our CBA assessment of the estimated costs incurred by UK premium listed companies, and so indirectly by shareholders, from the ‘premium’ paid due to the deal contingency created by requiring prior shareholder approval for significant transactions. Conversely, only one respondent suggested specific costs to them as an investor from the potential increase in due diligence around significant transactions, which did not offset our benefit estimate (see Chapter 17 for further detail). There also remained strong views from the sell-side, including issuers, that these rules are a genuine impediment to UK listed companies being competitive in global M&A. We have therefore proceeded as consulted on by finalising a disclosurebased regime for significant transactions that does not require commercial companies to seek prior shareholder approval for the transaction. We have also reviewed our notification proposals in light of the feedback received. Our notification requirements (set out in more detail
below alongside consideration of the feedback) are intended to support that engagement and facilitate shareholders holding companies to account

by ensuring timely information is disclosed to the market. We also recognise that disclosure requirements can impose significant costs (both monetary and opportunity) on companies who are engaged in live transactions. We have sought to keep these disclosure requirements proportionate, which may have a positive impact on associated costs versus premium listing. In response to the feedback on our proposal not to carry forward the premium listing ‘class 2’ notification regime into UKLR, we considered carefully whether to include a notification regime for transactions below the 25% threshold on the class tests. On the one hand, we agree the UKLR notification requirements may provide a useful framework that helps issuers decide what transactions to notify to the market and what information to include in the notification. However, we concluded that 25% was on balance an appropriate threshold against which regulation should set prescriptive notification requirements to support the specific purposes we set out in UKLR 7. For smaller transactions, we consider it proportionate to afford issuers the flexibility to make this decision. The UKLR notification regime complements but does not displace the company’s obligations to notify information under MAR. We have not imposed a disclosure regime for transactions below the 25% threshold although MAR will continue to apply and issuers may find aspects of the UKLR 7 requirements a useful framework for disclosure. DTR 2.5 – delaying disclosure of inside information
5.25 In the context of our proposal not to require prior shareholder approval for a significant
transaction, some respondents (particularly law firms) raised concerns about how to interpret existing guidance in DTR 2.5 on when selective disclosure to shareholders may be justified under article 17(8) of MAR, when the disclosure is made in advance of notifying a significant transaction under UKLR 7.
5.26 They pointed to DTR 2.5.7G, which provides the example of an issuer contemplating
a major transaction that ‘requires shareholder support’ who may selectively disclose details of the proposed transaction to major shareholders as long as the recipients are bound by a duty of confidentiality.
5.27 They suggested we amend this guidance to clarify that ‘shareholder support’ does not
necessarily mean formal shareholder approval via voting in a general meeting and can be interpreted more broadly. Some offered alternative drafting for us to consider. Our response:
We have taken on this feedback and have decided to adjust the guidance in DTR 2.5.7G. We have clarified that ‘shareholder support’ is not limited to circumstances where formal shareholder approval is required, partly by removing this specific wording.

Although we do not consider the adjusted guidance changes how MAR applies, we agree that the clarification may be helpful. We emphasise that DTR 2.5.7G is not an exemption to MAR and issuers must continue to consider their wider MAR obligations before selectively disclosing information about a transaction to any shareholder. Disclosure on significant transactions
5.28 In CP23/31, we proposed rules that would ensure that some of the information from our
current premium listing disclosure requirements for class 1 circulars would be carried over in the notification for a significant transaction in the UKLR. However, we also sought to remove requirements that could indirectly dictate how companies conduct due diligence and/or result in information being compiled purely to meet our rules.
5.29 Accordingly, we also said that notifications should not create additional material costs or
significant delays to issuers and asked for feedback on any potential timing concerns. In order to balance sufficiently detailed notifications with flexibility for issuers to determine additional content, we proposed a new overarching requirement to include other relevant circumstances or information necessary to provide an understanding of, and to enable shareholders to assess the terms of, the transaction and its impact on the company (which some respondents referred to as a ‘sweeper’ provision).
5.30 In Q8 of CP23/31 we asked:
Question 8: Do you agree with our proposed enhanced disclosures regime for significant transactions? If you disagree, what changes to you consider we should make and why?
5.31 We received extensive feedback to this question, including over 15 detailed responses,
which we have sought to summarise below.
5.32 Answers broadly fell into 3 groups:

The sell-side and the legal advisory community: most of these respondents,
while welcoming the FCA’s overall approach, commented that proposed notification requirements are excessive (or need to be simplified) and, owing to their timing requirements, could risk re-imposing the friction of additional due diligence beyond what a company would usually conduct that the reforms seek to mitigate.
The accountancy profession: these respondents engaged extensively on
the financial content requirements. This group coalesced around a set of counterproposals to adopt a US-style approach which would see most of the more detailed information, including historic financial information, provided after the transaction is completed.
The buy-side/asset owners, and related stakeholders. Their focus was largely
on advocating for the retention of requirements for a shareholder vote to approve significant transactions. We did not receive detailed feedback on what investors and asset owners value in terms of information. One buy-side trade association recommended that, should the FCA finalise the rules without introducing

shareholder approval for large transactions below the reverse takeover threshold, we should consider the proposals put forward by the accountancy profession.
5.33 We present the views of the sell side and of the accountancy profession in more detail
below.
5.34 Several respondents on the sell-side commented that the notification requirements as
proposed were too onerous in terms of content and difficult to put together as soon as possible after the terms of a significant transaction are agreed. Many said that current proposals would introduce friction and risk undermining the objectives of the reforms. Some noted that proposals would prove to be particularly onerous in competitive M&A contexts. Others focused more on the timing of the requirements, suggesting that issuers should be allowed to delay the publication of this information until after signing. Some explicitly referenced the US system as a viable alternative approach. A number of stakeholders in this group reiterated their view that a notification regime largely shaped by the rules for current class 2 announcements and the requirements of MAR would be adequate.
5.35 We received feedback on various aspects of our proposals, including the ‘sweeper’
provision in proposed UKLR 7.3.1R(1)(b). The rationale for introducing this provision was understood, but it drew strong criticism from law firms advising listed companies for being ambiguous in scope and creating uncertainty. It was also considered unnecessary as investors’ expectations on the level of information they would receive on the transaction should be fulfilled by specific notification requirements in UKLR 7, plus anything further required under MAR. In this respect, MAR was considered to be the appropriate ‘sweeper’, in conjunction with DTR 1A.3.2R, which requires that an issuer must take all reasonable steps to ensure any information notified to a regulatory information service (RIS) is not misleading, false or deceptive and does not omit anything likely to affect the import of such information.
5.36 Accounting firms and a related professional body said it was positive that the FCA had
decided to strengthen the requirements for financial information to be provided in the context of large transactions vis-à-vis what we had set out in CP23/10 but considered our proposed approach to still fall short of what would be needed to deliver a robust disclosure-based regime. In line with the sell-side, they considered that, as proposed, the enhanced notification provisions were likely to create significant timing tension between the requirement to include substantially increased disclosure in the transaction announcement and the requirement to announce the transaction as soon as possible to comply with MAR obligations. In their view, a better balance between speed and the need for reliable information could be achieved by allowing the audited historical financial information to be produced and disclosed after the announcement of the transaction. This approach is similar to that adopted in the US. This would remove the pressure of seeking to deliver the information prior to the deal announcement but would provide the market with more comprehensive information within a certain period after the completion of the deal. These respondents included extensive and thoughtful discussions on how the FCA could introduce such a regime.
5.37 Both sell-side and accounting stakeholders tended to be sceptical of our proposal that,
where financial information is not available in the form required, issuers should provide instead an explanation as to how the value of the consideration has been arrived at.

Their concerns focused on the fact that issuers may be reluctant to provide details of how they have calculated their offer value, hence there may be a tendency for generic or higher-level disclosures to fulfil this requirement. In a similar vein, another respondent said that it was likely most issuers would give only a generic explanation of how they determined what price to pay, and they queried whether this would provide investors with any additional useful information.
5.38 We also heard concerns around the lack of guidance on the application of our proposed
rules for alternative disclosures when HFI is not available. Stakeholders also raised a number of issues around our proposals to allow for pro forma financial information to be published under less detailed standards. Some respondents criticised our proposals to allow HFI on the target of an acquisition to be produced under a different accounting policy than that of the acquirer and/or using non-GAAP metrics. They said that this would risk a lack of consistency between issuers, which could potentially reduce investors' understanding and comparability with other issuers.
5.39 There were also questions raised as to what may constitute a suitable level of disclosure
to address the requirement for a statement that the board considers the consideration to be fair as far as the security holders of the company are concerned. Some respondents commented that this requirement may prompt boards to seek assurance from third parties, potentially in the form of a fairness opinion, in order to support this statement, which, they argued, inevitably would create an incremental cost for companies. Our response:
In finalising our rules, we have decided to retain the general disclosure approach as consulted on, but we have removed the requirement for 2 years of audited accounts where available, or alternative statements by a board if not available, in relation to acquisitions. We have also allowed certain disclosures to be delayed and now require a final notification upon completion of a transaction. We explain these changes and our rationale in more detail below. In CP23/10, we proposed the removal of class 1 transactions circular requirements and sought views on the desirability of relying instead on the current class 1 / class 2 notifications, MAR and information in annual financial reports on a post-hoc basis. We were also open to other views and elicited feedback on whether any aspects of the information currently required in class 1 circulars may be beneficial to investors prior to a deal being concluded, to enable shareholders to apply some scrutiny and engage a company even in the absence of a vote. However, in doing so, we noted that the same level of disclosure as in premium listing circulars currently would not necessarily be appropriate for a notification under our proposed rules since it no longer had the purpose of seeking to give shareholders sufficiently comprehensive and accurate information to inform a vote to approve a transaction. We also noted feedback on the associated friction and costs for companies preparing such information. We considered that, with the removal of the

shareholder vote, a more proportionate arrangement should be sought to reduce frictions for companies while still putting adequate information in the hands of investors in a timely way. In CP23/31, we sought to strike a balance and proposed rules that would ensure that a listed company discloses sufficient information concerning significant transactions on a timely basis, to support engagement between the listed company and its shareholders, and to enhance market transparency. At the same time, we sought to avoid triggering sponsor assurance or third-party due diligence, nor did we propose to require FCA approval of the notifications. Stakeholders’ feedback remained polarised between those who consider we are requiring too little, in particular the accountancy profession, and those who believe we are asking too much (companies and their advisors). We received very little feedback from buy-side stakeholders on what information they would find most useful. The absence of a strong investor voice has meant we have had to make a judgement as to the balance between making reliable information available to enable shareholder engagement and ensure market discipline, on the one hand, and minimising friction, especially in competitive M&A settings, on the other. We remain of the view that, even in the absence of a vote, rules for minimum content requirements (instead of wholly relying on MAR) are needed to achieve baseline transparency standards in terms of content and consistency. We are also seeking to enable boards to make timely disclosures based on information and due diligence that they would ordinarily consider prior to entering into an agreement on a transaction, rather than mandating information that would trigger specific assurance processes to meet our rules. Main changes to the consultation position in CP 23/31 Accordingly, we have decided not to introduce a specific post-completion disclosure framework for historical financial information (other than that already imposed by accounting standards), as suggested by some stakeholders, because this would not provide timely information that would promote engagement between investors and companies. Nor, conversely, have we followed suggestions to leave our regime to rely solely on MAR, which would not provide any consistency on content and format that we believe investors will need and gives some certainty for issuers as to the expected minimum content they should consider. Instead, the final rules require a prescribed content for the notification but also provide further flexibility around the timing of the notification of certain pieces of information. We have also taken on board feedback that requiring audited financial reports on the target of an acquisition (or the alternative approach allowed in CP23/31 of making a statement as to the consideration paid being ‘fair’) would not be practical in a number of scenarios, especially for acquisitions.

We have also taken the opportunity to recalibrate (rather than remove) the ‘sweeper’ provision, as detailed below. We still consider it a useful reminder to issuers to consider any further relevant information, taking into account the stated purposes of our requirements. This offers flexibility to issuers while supporting shareholders. In summary, we are finalising the rules so that, in the case of a significant transaction:

UKLR 7.3.1R requires a notification to be made as soon as possible
after the terms of a significant transaction are agreed. This notification will broadly reflect the content of what is currently a notification for a class 1 / class 2 transaction in LR 10.4.1R, but slightly enhanced as set out in UKLR 7, Annex 2 Part 1. The recalibrated ‘sweeper’ provision requires issuers to consider whether further relevant information should be notified at this stage. We have retained the proposed provision in UKLR 7 Annex 2 Part 1.1R (16) for a statement by the board that the transaction is, in the board’s opinion, in the best interests of security holders as a whole.
For disposals only, UKLR 7.3.2R requires a company to make additional
disclosures around historical financial information going back two years on the target of the transaction as set out in UKLR 7, Annex 2
Part 2. It also requires, for all transactions, the publication of certain
non-financial information in line with UKLR 7, Annex 2 Part 3. In both cases, the information must be notified as soon as possible after the terms of the transaction are agreed, and the information has been prepared or the listed company becomes, or ought reasonably to have become, aware of the information, and, in any event, by no later than the completion of the transaction. UKLR 7.5 and UKLR 10 introduce similar requirements applicable to circulars for reverse takeovers, which we discuss in the next Chapter.
UKLR 7.3.3R requires a listed company to notify, as soon as possible
after the completion of the significant transaction, that completion has taken place and that, except as disclosed, there has been no material change affecting any matter contained in previous notifications under UKLR 7.3.1R and UKLR 7.3.2R.
UKLR 7.3.4R contains provisions on the presentation of financial
information, estimated synergies or other quantified estimated financial benefits and pro forma financial information, for where a listed company decides to include such information in a notification. Approach to significant transactions notifications for disposals and reverse takeovers While we have made no changes to Part 1 of Annex 2 to UKLR 7, which contains the requirements for the general information relating to the transaction, Part 2 of Annex 2 now contains requirements for disposals only. Typically, disposals are subject to less demanding timeframes which should allow for listed companies to gather the required information. We also consider that for disposals, in most instances, companies will be in a

position to make the relevant financial disclosures as they should already be in possession of the relevant financial information. In the instances where this may not be the case – eg, when it is an asset that is being disposed of – companies will be able to plan ahead and comply with the alternative requirements contemplated in Part 2.2(4) of Annex 2 to UKLR 7. We consider that the removal of the requirement to publish HFI for the target of an acquisition up to reverse takeover levels should also largely address criticisms around our approach to pro forma financial information which we are otherwise finalising as consulted to provide flexibility to issuers, as long as they explain the sources and standards on the basis of which the information has been prepared. For disposals, UKLR 7 Annex 2, Part 2.2R(4) (and similar rules in UKLR 10 for the circular for reverse takeovers) require that where the financial information for the target of a disposal is not available or cannot be produced in accordance with the relevant requirements, the listed company must publish:

a statement by the board that the information is not available or cannot
be produced
an explanation as to how the value of the consideration has been arrived
at, and
a statement by the board that it considers the consideration to be fair as
far as the security holders of the company are concerned We note that the concept of ‘availability’ of audited financial statements is to be understood literally and should not be seen as a continuation of existing interpretations and market practices which currently require a high threshold for determining that financial information is not available. Relatedly, we note that the reference in UKLR 7 Annex 2 Part 2.2(4) to information not being capable of ‘being produced’ in line with certain requirements should be understood as requiring reasonable endeavours (but not entail undue time, cost, and effort). In practice, we consider that the condition for not providing historical financial information should generally be satisfied when the data that can be used as the basis for publishing the required HFI is not readily available and that producing it would require extensive assumptions and external input. Ultimately, it is for issuers to determine whether they can reasonably produce HFI to the required standard or opt instead to provide an explanation and statement that the consideration is fair. We may consider providing further guidance on this and the concept of ‘availability’ in due course depending on how market practice adapts to our requirements. With regard to the explanation as to how the value of the consideration has been arrived at, we expect that, by the time a listed company has reached the point of announcing a significant transaction, its board will have undertaken an assessment to determine the consideration at which they expect to conclude the transaction. On the statement by the board that it considers the consideration to be fair as far as the security holders of the company are concerned,

the new framework will allow boards and executives to exercise more discretion than they are currently permitted in determining what they have to communicate to the market ahead of completing a significant transaction. In the absence of suitable financial information, investors will, in turn, have to rely more on the board’s judgement as to the fairness of the price paid (for reverse takeovers which we discuss in Chapter 5), or received in the case of a disposal. We therefore are also requiring a statement by the board that it considers the consideration to be fair as far as the security holders of the company are concerned for disposals and, as discussed later, reverse takeovers. The board’s statement of fairness should build on and follow logically the explanation as to how the value of the consideration has been arrived at. Our expectations of how firms will meet these requirements. In the absence of HFI, our requirement for an explanation of how the consideration has been arrived at and for a board statement of fairness of the consideration aim to provide the market with meaningful insights into the due diligence the company has already conducted, a discussion of the metrics it has considered and the process it has followed. It is an opportunity for the board to set out in further detail some of the information that the initial notification required by UKLR 7.3.1R will already have elicited, in particular in response to UKLR 7 Annex 2, Part 1.1R(2), (4-8) and (12). Formulaic and highly caveated explanations are unlikely to satisfy the market (or our requirements). In the case of disposals, listed companies should be able to produce meaningful disclosures, having the benefit of being familiar with the asset, line of business, joint venture, or subsidiary, as relevant. For reverse takeovers, careful due diligence will be important and, given the likelihood issuers would also need to produce a prospectus, is likely to be necessary in any case. By introducing the requirement for a statement by the board that it considers the consideration to be fair, our objective is to foster a more explicit and comprehensive dialogue between boards and the market as regards the consideration agreed for the transaction in a way that goes beyond a statement by the board that the transaction is, in the board’s opinion, in the best interests of security holders as a whole as already required by UKLR 7.3.1R. We acknowledge views that it is possible that boards will seek third-party input in order to feel comfortable in giving this type of confirmation and that this may take the form of an M&A fairness opinion from a financial adviser, subject to developments in market practice. We do not consider, however, that it is necessary for boards to seek thirdparty comfort or for their advisors to assume this is required in market practice. Sponsors’ fair and reasonable opinions in the context of related party transactions aim to mitigate specific types of
conflict-of-interest risk

which should largely be absent in other types of significant transactions (and reverse takeovers), despite inherent principal-agent problems. Listed issuers, advisors and the buy side all have a stake in the success of these reforms and ensuring that appropriate market practice and a pragmatic consensus on what investors should be able to rely on emerge over time. We will monitor how the market develops and will intervene where necessary, including through our convening powers. However, we will only do so if there are clear indications that the market is not adjusting to the new framework. The content of circulars for reverse takeovers is discussed in Chapter 6. Ordinary course of business, aggregation and other matters
5.40 In CP23/31, we proposed clarifications to the existing concept of transactions
considered to be in the ‘ordinary course of business’, which are then exempt from our specific rules for significant transactions (and similarly for related party transactions). We sought to provide more examples of what we consider to be in the ordinary course of business, in particular aiming to be more open to capital expenditure that was consistent with an issuer’s commercial business.
5.41 We also proposed to include the existing premium listing aggregation rules with
minor changes. These rules specify when an earlier transaction (or transactions) must be aggregated with a current transaction to determine whether the rules for a significant transaction or a reverse takeover apply on an aggregated basis. We proposed consequential changes to take account of the proposed removal of a shareholder vote on significant transactions and for proportionality, and some other ancillary clarifications. The proposed rules were intended to broadly preserve the status quo on reverse takeovers in terms of when a shareholder vote is required. Feedback and our response
5.42 In Q9 and Q10 of CP23/31 we asked:
Question 9: Do you agree with the changes we are proposing to clarify the scope of significant transactions and simplify our requirements, including our ‘ordinary course of business’ guidance and revised aggregation rules? If not, please explain the areas you disagree with. Question 10: Do you consider that the meaning of ‘ordinary course of business’ can be evidenced by the existing or proposed accounting treatment of the matters that are the subject of the transaction? Please provide your reasons, if applicable.

Ordinary course of business
5.43 We received 12 responses on our proposed new provisions describing what is within or
outside of the ‘ordinary course of business’, from a range of stakeholders drawn from the legal and accounting communities, platforms and exchanges, and buyside trade bodies. They supported the inclusion of more information on ordinary course within UKLR, and the matters we’d described.
5.44 Some practitioners considered it would, however, be clearer and more helpful to present
all of the information as guidance rather than the mixture of rules and guidance we had proposed, thus preserving the existing flexibility of premium listing. For example, under the proposed rules, it would not be possible for an issuer to treat an acquisition of another company as ordinary course, even were the transaction satisfied the ‘size and incidence’ criteria in guidance retained from premium listing.
5.45 We received 7 responses on the interaction between ordinary course and applicable
accounting standards from a range of stakeholders including reporting accountants and other professional advisors. On balance there was little to no support to generally linking ‘ordinary course’ to a particular accounting treatment.
5.46 While two respondents thought it may be possible for ordinary course of business to be
linked to a particular accounting treatment, one of these caveated their support because of the likely complexity and need for guidance. The other respondents did not consider ordinary course could be evidenced by a particular accounting treatment. There was concern about the degree of subjectivity and risk of avoidance. A trade body suggested that, while they would support guidance that took accounting treatment into account, there should be no greater linkage. Aggregation
5.47 We received feedback from 4 respondents, including practitioners and their trade
bodies, on our proposals relating to the information that must be included in a notification where the transactions are notifiable on an aggregated basis. Their interpretation of our proposals led three of them to conclude our approach didn’t quite strike the right balance, being too onerous (or hadn’t been fully understood), and offered alternative solutions. Other matters
5.48 Some in the legal community observed that a company’s obligation to release a
supplementary notification was open-ended (because the relevant provisions omitted an end date) with disproportionately onerous consequences.
5.49 One respondent repeated the earlier support we had received for our proposal not to
carry forward the profits test from premium listing.
5.50 A trade body whose members advise listed companies did not agree with our proposal
to set the threshold for notifying indemnities and similar arrangements at 1% of the company’s market capital (which is an alternative threshold set out in premium listing guidance when the LR profits measure is anomalous).

5.51 During our engagements some advisors to listed companies queried our rationale for
not carrying forward the premium listing approach that treats certain break fees as ‘class 1’ in LR terminology, or a notifiable significant transaction in UKLR terminology. Initial concerns raised by some sell side advisors had abated during our further engagements. Our response:
In relation to whether a transaction is within or outside of the ordinary course of business, we broadly agree with the responses that this should be presented as guidance. We have made corresponding changes to UKLR 7, other than for reverse takeovers which we continue to specify in a rule as falling outside of the ordinary course of business. We have not included any further reference to accounting treatment in the relevant UKLR guidance provisions on ordinary course of business (although we acknowledge issuers may include such considerations in any individual guidance request to us, if they consider it relevant to their specific situation). We agree with some of the feedback on aggregated transactions and have revised the drafting in our final rules to be clearer on when earlier transactions are required to be included (or not) in the aggregation for classification purposes. For significant transactions, we have also adjusted the final rules to ensure the intended proportionality is achieved with respect to the content of the notification on earlier transactions. Where a transaction is a reverse takeover on an aggregated basis, we have applied our notification requirements to the transactions as a whole. We consider this proportionate, given the scale of the transaction, its impact on the company and the fact it requires prior shareholder approval. Where a company considers a different approach to disclosure is justified, it may engage with us at the relevant time and we will consider requests on a case-by-case basis. We have clarified that a supplementary notification relates to matters arising before a transaction has completed (issuers are not required to apply the requirements to subsequent matters). We have reinstated the premium listing threshold at which obligations are triggered for indemnities and similar arrangements. We have proceeded as consulted on by not including a profits test within the class tests given the continued support for this change. We confirm that break fees are not treated as significant transactions in their own right. The role of sponsors on significant transactions
5.52 In Q11 of CP23/31 we asked:

Question 11: Do you agree with our proposed to approach to when companies should be required to appoint a sponsor on significant transactions (ie, limited to where issuers apply to the FCA to seek individual guidance, waivers or modifications)?
5.53 22 respondents fed back on the proposed sponsor role on significant transactions.
There were strong differences of opinion.
5.54 Law firms and trade bodies advising or representing companies (other than reporting
accountants) strongly supported a reduced role for sponsors. Some pushed for further flexibility for listed companies or other advisors to be able to liaise with us directly on the application of our rules.
5.55 Reporting accountants on the other hand advocated for a more extensive role for
sponsors to ensure high quality and full disclosures on significant transactions. This aligned with their proposals for detailed financial disclosures to support investment decisions by market participants, with mandatory third-party assurances which we discuss above.
5.56 Four responses representing buyside stakeholders preferred to stay more closely
aligned with the premium listing approach to the role of a sponsor on a significant transaction as they felt that sponsor oversight of transactions protected shareholders. There was an argument that allowing an issuer to take responsibility for meeting its notification obligations without a sponsor telling it what to do was akin to it marking its own homework.
5.57 A sponsor firm also told us in its written response that the value and support that
sponsors are currently able to offer the FCA would be reduced in line with its narrower role. It also wanted to understand more about FCA expectations of sponsors and the extent of their responsibilities to the FCA. Our response:
We have finalised our rules in line with the approach we consulted on. This applies the formal sponsor role to where we consider it provides the most value to us and other stakeholders. We agree with feedback that sponsor firms can offer value beyond the narrower circumstances where it will be mandatory to appoint a sponsor (versus premium listing), given their wealth of experience on our rules and their engagements with the FCA on live transactions. Our new approach does not prevent issuers seeking guidance from firms who are on our sponsor list on the application of our rules, and we expect many will continue to do so. In such cases, it will no longer trigger the formalities that accompany a ‘sponsor service’, although that also means sponsors are not directly subject to more specific FCA sponsor rules for those activities. This approach offers issuers more flexibility to determine when and from whom to obtain professional guidance on our rules. This should remove

unnecessary costs and frictions from our rules, in particular to ensure issuers are not effectively having to pay for the same advice twice. With the exception of transactions that are reverse takeovers (discussed in more detail below), we confirm that we have not included the following aspects of the sponsor role in premium listing for significant transactions:

The appointment of a sponsor at the outset of a transaction that may
be a significant transaction, to provide guidance on applicable listing requirements (which may include class-testing the transaction), and DTR and MAR obligations.
The retention of a sponsor throughout the transaction to continue to
provide guidance.
Sponsor oversight of a significant transaction circular (no circular is
required under UKLR).
Sponsor assurances to the FCA on the impact of the transaction and
other matters under a sponsor declaration.
We are also not introducing a new role for sponsors around oversight or sign off with regards to the notification requirements. We consider this would introduce costs friction and delays for issuers. This could lead to market disruption if it caused a time-sensitive notification to be delayed. We consider the changes we have made to further clarify and reduce complexity in our requirements in UKLR 7, and the overall clearer presentation of our requirements in UKLR vs LR, supports a narrower role for sponsors. Issuers should be able to interpret our rules more easily either directly or with other advice such as from a law firm, which may not necessitate the involvement of a sponsor firm. We already engage regularly with sponsor firms on a range of matters. We value these engagements and intend to keep the dialogue going to help us monitor how the new approach is bedding in and hear from sponsors on their experiences. As we mention earlier in this policy statement, we also intend to monitor the impacts of our changes and have committed to a review in 5 years, with a particular focus on issuers undertaking significant transactions. Transactions undertaken by companies facing financial difficulty Our proposals
5.58 We noted in CP23/31 the two key areas of our LR that might apply where a company in
premium listing undertakes a transaction to alleviate financial difficulty. We proposed the following approaches for consultation:
For a transaction that is classified as a ‘class 1’ significant transaction (such as large
disposal to raise finance) we proposed to follow the UKLR approach to significant transactions (as discussed earlier in this Chapter) with additional, bespoke content for the notification but not a working capital statement.
Where the listed company produces a circular containing proposals to be put to
shareholders in general meeting relating to a reconstruction or refinancing (which generally flows from UK Companies Act requirements or other legislation), we proposed not to carry forward the requirement in LR 9.5.12R that the circular must also include a working capital statement.
5.59 We considered it would no longer be proportionate to mandate the appointment of a
sponsor in the new approach, which seeks to remove transactional delay and friction at an acute point in the company’s life and replace them with less complex requirements.
5.60 The additional disclosures for significant transaction notifications would still be an uplift
in regulation compared to standard listing, aimed at notifying shareholders, enhancing transparency and supporting engagement. Reconstruction and refinancing transactions would remain subject to and governed by applicable law and director duties, as with all other companies whether or not they are UK-listed. The relevant circular would still be required to comply with our general circular requirements in UKLR, which would be a further uplift in regulation compared with standard listing. Summary of feedback and our response
5.61 In Q12 CP23/31 we asked:
Question 12: Do you agree with our approach to transactions undertaken by companies facing financial difficulty for the commercial companies category and the amendments to proposed versus current premium listing requirements? If not, please explain and suggest any alternative approach, as relevant.
5.62 We received around 17 responses on these specific proposals. These were from a range
of advisors to listed issuers and their trade bodies, a pensions fund, panels advising the FCA and some UK exchanges. We also held detailed discussions with advisors. Enhanced disclosures for significant transactions entered by companies in severe financial difficulty
5.63 Respondents generally agreed that transparency about financial difficulty was
important and that issuers should consider this when notifying the market about having entered into a notifiable significant transaction to alleviate the problem.
5.64 However, strong concerns were voiced by a range of advisors on our proposed
approach. Key themes emerged and different solutions were offered.

5.65 Firstly, the requirements as a whole were complex. The concept of a company in ‘severe
financial difficulty’ was undefined (whether in UKLR or at law) and would require further elaboration such as through FCA guidance.
5.66 Issuers would, most likely, require the guidance of a sponsor to ascertain whether it was
in scope and then to assist it with discharging its notification obligations. Both of these aspects would require the issuer to undertake additional and substantial due diligence on itself, beyond that undertaken for the purpose of the transaction itself.
5.67 A trade body suggested it may be necessary under this approach to require the
appointment of a sponsor ‘in certain circumstances’ but didn’t specify what those circumstances would be and how they would be established. A sponsor firm also supported a mandatory sponsor role.
5.68 Opinions were strongly held among reporting accountants. In particular, a firm argued
that a distressed issuer would fail to self-identify as being in financial distress without a working capital exercise and a sponsor was needed to drive that exercise otherwise investors would be opened up to a greater risk of unexpected corporate failure or loss of their investment in whole or in part.
5.69 Reporting accountants also supported an approach that favoured detailed disclosures
on financial matters, possibly on an extended timeframe with third-party oversight and assurance from themselves and sponsors. The purpose would be to support analysis by market participants in their investment decisions. Among their suggestions were that the FCA issue guidance to elaborate on the additional enhanced disclosure items in Part 5 and to draw a connection with our Technical Note 619.1 – Guidelines on disclosure requirements under the Prospectus Regulation and Guidance on specialist issuers.
5.70 Others, particularly law firms, queried the value of taking such a prescriptive and detailed
approach to disclosure, noting that MAR already requires the company to disclose price sensitive information including where the company is in financial difficulty. Our approach could impose friction on time-sensitive transactions.
5.71 They also noted we had drawn from concepts in LR 10.8 although LR 10.8 was designed
for a different purpose (ie, where the FCA may grant the issuer a waiver from seeking prior shareholder approval and preparing a circular for class 1 transaction because of the immediacy of its severe financial difficulty) and might not be appropriate as it set a very high bar for disclosure.
5.72 This could lead to inconsistent disclosure outcomes because an issuer might interpret
the concept of ‘severe financial difficulty’ restrictively so that the rules are rarely if ever in play, or not initiate the necessary due diligence on itself to determine whether they are in scope.
5.73 Issuers might also be disinclined for commercial and reputational reasons to place
themselves in the category of a company in severe financial difficulty. There was discussion around whether an issuer would do so if the transaction effectively solved the problem.

5.74 When we engaged further on these points with legal advisors, there was support for
a more flexible approach that set out FCA expectations via guidance on what type of information issuers should consider disclosing when the notifiable significant transaction has been entered into to alleviate financial difficulty. They noted that ‘financial difficulty’ was an existing concept in our DTR 2.5.4G guidance on MAR and would not require further elaboration.
5.75 A pensions provider supported enhanced disclosures although not in place of a
shareholder vote.
Our response:
We recognised, based on the feedback, that the approach we consulted on would not fully achieve our aims for a proportionate, disclosure-based regime. Therefore, in our final rules we have not retained the concept of a company in ‘severe financial difficulty’ or the prescriptive list of additional enhanced disclosures in proposed UKLR 7, Annex 2 Part 5. Instead, we have introduced guidance setting out our expectations on this point and the types of information issuers should consider disclosing. As we explained in CP23/31, in designing a single listing category for commercial company equity shares, we want to move away from a regulatory approach that imposes disproportionate friction on UK-listed companies entering into transactions. We consider this is particularly important when the effect of the transaction would be to support the company’s survival, ultimately benefitting its shareholders. It remains our view that companies ought to be transparent about having entered into a notifiable transaction to alleviate financial difficulty (including anticipated financial difficulty). This will be a question of fact based on why the company decided to enter into the transaction and for what purpose, including when the transaction has removed the problem. We disagree with feedback that we should set rules requiring issuers in these circumstances to divert time and financial resources to creating data for the purpose of supporting analysts with their modelling, with the associated risks that imposes on listed companies. The working capital exercise and financial disclosures in a class 1 circular exist for a different purpose, which was to inform the company’s shareholders in deciding whether to approve a transaction. However, the company should still consider its obligations to disclose market sensitive information at the relevant time under MAR. (As with all companies who are subject to MAR, issuers undertaking a significant transaction must consider their MAR obligations at all times and obtain appropriate advice where necessary.) The company’s post-event financial reporting will also be relevant. As for other significant transactions, which we discuss above, we will not require issuers to appoint a sponsor where they are undertaking a transaction due to financial difficulty, although this does not prevent issuers from choosing to seek advice.

Reconstructions and refinancings
5.76 We received less detailed feedback on these specific proposals (set out in paragraphs
5.58 and 5.59 above), which was potentially due to the technical nature of this area,
which is also closely linked to wider legislation outside of FCA rules.
5.77 From those responding, there was general support for the proposals among advisors
to listed companies and their trade bodies (other than reporting accountants), panels advising the FCA, an exchange and a buy-side trade association. Three buyside respondents highlighted different points. A pensions provider and an advisor to the investor community disagreed with our proposal not to carry forward the requirement for a circular to include a working capital statement. The advisor also objected to the FCA not vetting the circular, or requiring sponsor oversight, as it felt this would reduce transparency and the credibility of the disclosures. However, a buyside trade association agreed with our proposals.
5.78 Responses indicated our discussion in paragraph 7.13 of CP23/31 made it slightly
unclear whether the Part 5 disclosures also applied to a reconstruction or refinancing transaction. They noted that usually these transactions were usually exempt from the LR significant transactions regime. Some reporting accountants however pushed for UKLR to introduce specific measures, such as reinstating the working capital statement and also extending the Part 5 disclosures to a reconstruction and refinancing transaction.
5.79 A trade body representing the legal community made an ancillary point about the
possible interaction with a future UK prospectus regime (under the POATR proposals). In the specific scenario where the issuer undertakes a rescue rights issue below the threshold for a prospectus, alongside or as part of a reconstruction or refinancing transaction there would be no legal or regulatory requirement for the company to run a working capital exercise. This might result in people investing in the rescue rights issue on incomplete information.
5.80 Another respondent queried who would advise companies on their related MAR
obligations if the UKLR no longer mandated the appointment of a sponsor. Our response:
We have not included in our final rules for commercial companies a provision akin to LR 9.5.12R for the reasons set out in CP23/31, nor the associated sponsor role from premium listing. This means that we are not continuing to add requirements to these circulars in the way currently required by premium listing by overlaying a working capital statement and imposing a mandatory sponsor role. These requirements add friction at an often-critical juncture in the company’s existence. However, circulars must still comply with our general requirements for circulars which are set out in UKLR 10 and are intended to support the company’s shareholders. We acknowledge some comments in response to this area suggested that the better intervention may be to consider whether the relevant

threshold for a further issuance prospectus would capture these types of transaction, since a prospectus will contain working capital disclosures alongside relevant financial information. We will explore these points and seek further views as part of our consultation on the POATR regime later in Q3 2024. As with all companies who are subject to MAR, issuers who are undertaking a reconstruction or re-financing transaction must consider their MAR obligations at all times and obtain appropriate advice where necessary.

Chapter 6
Commercial companies category – reverse takeovers
6.1 In this Chapter we describe the feedback we received on our proposals presented in
CP23/31 on reverse takeovers and our response. Our final rules are in UKLR 7 and 10 in
Appendix 1.
Our proposals
6.2 CP23/31 proposed that, in undertaking a reverse takeover under the new commercial
companies category rules, an issuer must:

make a notification via a RIS as soon as possible after the terms of the reverse
takeover are agreed (in addition to applicable DTR or MAR obligations) including some of the information required for a significant transaction notification
send an explanatory circular to its shareholders in accordance with the
requirements in UKLR 10
where the reverse takeover also constitutes a related party transaction, we would
require the notification and circular to also include the information required to be disclosed in the draft UKLR 8, and
obtain shareholder approval in a general meeting for the transaction prior to
completion
6.3 The content of the circular we proposed was broadly similar to that of a notification for
a significant transaction with the aim to ensure consistency while allowing more time to ensure the reliability and completeness of the disclosures in the circular to support voting decisions at a later stage. Summary of feedback and our response
6.4 We asked:
Question 13: Do you agree with our proposed approach to reverse takeovers in the commercial companies category, including requiring a sponsor and FCA approval of a circular? If not, please explain what you disagree with and why, if relevant. Question 14: Do you agree with our proposed changes to the information to be included in the reverse takeover shareholder circular? Please explain your views and suggest an alternative approach if you disagree.

General approach to reverse takeovers
6.5 Most respondents were supportive of the approach taken in the consultation. Those
preferring shareholder votes on significant transactions generally were also in favour of retaining the vote for reverse takeovers. Others who supported our approach to not require shareholder approval for significant transactions mostly supported retaining a vote in the case of reverse takeovers, accepting the view that these are more transformative by nature and often result in a new company and re-admission to listing.
6.6 We received a query on the proposed UKLR 7.2.13R in relation to our proposed approach
to aggregating transactions for reverse takeovers. This comment echoed similar views around proposed aggregation rules for significant transactions which we consider we have largely addressed as explained in Chapter 5. Circular disclosures
6.7 Some respondents who saw the requirements for notifications of a significant
transaction as excessive and impractical, reiterated their views in the context of the circular for reverse takeovers. Others commented that it would be helpful to avoid duplication between the notification and the circular for reverse takeovers.
6.8 Others argued that if the FCA were minded to retain the approach proposed in CP
23/31, then there would be scope to simplify the rules around the content of the circular if a prospectus was required to be published so that the circular would only include the information that would not otherwise be included in the prospectus.
6.9 Some said that they were supportive of the proposed approach on the assumption
that the contents of the prospectus to list the enlarged group remain substantially the same as regards the most important aspects. One respondent noted that the proposed lack of prescription as regards the basis of financial statements and pro forma financial information would be at odds with the prospectus regime, and that, in the case of a reverse takeover with readmission, the circular and the prospectus may be published at the same time, potentially causing confusion. Our response:
We are finalising the rules with modest changes from the approach we consulted on. These are mainly aimed at:

‘relocating’ the rules around historical financial information for the target
of an acquisition from Annex 2 to Chapter 7 of the UKLR to Annex 1 to
Chapter 10 of the UKLR
clarifying the circumstances in which a statement of significant change
in the issuer’s financial position is necessary as set out in Annex 2 to UKLR 10, and
making a number of consequential changes that have become
necessary in view of the modifications we made in finalising various rules on notifications in Chapter 7 of the UKLR (see Chapter 5)

Otherwise, the final rules reflect the approach we have taken in consultation. We consider that the circular for a reverse takeover has a different purpose from a prospectus. The circular supports shareholders in determining how to vote. A prospectus, which may be published after a vote is taken, addresses different transparency needs. A fuller discussion on our approach to the presentation of financial information for significant transactions can be found in the previous
chapter, which is also relevant to reverse takeover circulars.

Chapter 7
Commercial companies category – related party transactions
7.1 In this Chapter we describe the feedback we received on our proposals presented in
CP23/31 on related party transactions and our response. Our final rules are in UKLR 8 in
Appendix 1.
Our proposals
7.2 We proposed to carry forward into UKLR a modified version of the related party
transactions regime currently used in premium listing. This would be an uplift to standard listing, where there is no related party regime beyond the separate requirements on related party transactions in DTR 7.3.
7.3 We proposed to require, for transactions or arrangements that are at least 5% on any of
the applicable class tests, that issuers:

obtain the approval of its board for the transaction, while ensuring any conflicted
director is excluded from the board’s consideration of the transaction and does not vote
obtain and disclose an opinion from a sponsor that the transaction is fair and
reasonable so far as shareholders are concerned, and
notify the market about the transaction
7.4 We proposed not to carry forward the premium listing requirements for any transactions
below the 5% threshold, nor require shareholder approval for transactions at or above 5%. We also proposed not to carry over a requirement that an issuer must seek sponsor guidance on our rules when it proposes to enter into a transaction that may be a related party transaction.
7.5 We proposed some clarifications and adjustments to existing definitional provisions, and
sought views on whether stakeholders continued to value a specific definition of related party for the purpose of the Listing Rules, or whether we should move to a definition based on accounting standards.
7.6 Within the stated purposes of our requirements (as set out in UKLR 8) we proposed also to
retain the premium listing approach that the rules are intended to prevent a related party from taking advantage of its position and prevent any perception that it may have done so. We added that the rules are intended to ensure that shareholders are notified, supported in their engagements with the company and that market transparency is enhanced.

Summary of feedback and our response
Our general approach to related party transactions
7.7 In Q15, CP23/31 we asked:
Question 15: Do you agree with our proposed approach towards a related party transactions regime for the commercial companies category and the specific disclosures proposals for notifications? Please provide any alternative views as relevant.
7.8 We received 26 responses dealing specifically with this question.
7.9 Most respondents agreed with our proposal to retain the sponsor’s fair and reasonable
opinion and at the 5% threshold we proposed. There were no concerns raised about the form of notification we proposed or our proposal to ‘switch off’ DTR 7.3 for issuers who are required to comply with UKLR 8.
7.10 Views were far more polarised on not requiring shareholder approval for transactions
at or above 5%. Around 11 of the 26 responses agreed and 15 objected, broadly among the same cohorts as for significant transactions. However, there was also an indication from a trade body representing investors that at least some of its members felt less strongly about requiring shareholder approval for these types of transactions although the majority of its members did not support the proposals.
7.11 Those who wanted to preserve the shareholder vote offered similar reasons, namely
that it served as a check on the board and enabled shareholders to protect value. They also emphasised the risks to shareholder value from conflicts of interest and considered the premium listing approach a key feature of the UK’s high standards of corporate governance, protecting shareholders. A trade body told us that for investors who already own premium listed shares and will no longer receive disclosure with sponsor assurance over related party transactions below the 5% threshold, the shareholder vote at or above the 5% threshold became even more critical. In their view, the changes would harm the perception of investing in the UK. They felt that a disclosurebased approach also increased costs for investors and may result in less proactive engagement by issuers. Minority shareholders, or highly diversified shareholders, would be disproportionately impacted.
7.12 We also received some other, more marginal commentary. A trade body representing
corporate brokers told us some members disagreed with a UKLR regime for related party transactions, and preferred relying on the separate regime in DTR 7.3. On the other hand, a law firm who supported a single related party transaction regime across our rules considered that it should be based on UKLR 8 rather than DTR 7.3.
7.13 Some in the legal community considered the UKLR related party regime could support
our proposed requirements in respect of controlling shareholders and offer greater scrutiny of transactions with or for the benefit of a controlling shareholder. They suggested this could involve retaining the need for a shareholder vote (as per premium listing) as an effective sanction for breach of our proposed requirements for the listed

company to enter into a ‘relationship agreement’ with a controlling shareholder; or alternatively by removing the 5% de-minimis threshold at which our key notification and governance requirements are triggered for these transactions. (We discuss CP23/31 proposals and final rules on controlling shareholders in Chapter 4 above including our response on these points.)
7.14 They also suggested that ordinary course of business transactions should not be
exempt from our UKLR 8 requirements, having regard to our proposals for defining when a transaction is within or outside of the ordinary course of business. Our response:
Having taken into account all responses received, we have decided to finalise our rules on related party transactions in UKLR 8 broadly as we consulted on. We continue to view our approach as setting a robust framework to manage such risks and meet the stated purposes of the rules, while not imposing the additional cost and frictions for issuers of mandating a shareholder vote. As with significant transactions, we recognise there are strong and opposing views held by both sides of the debate around shareholder votes. In coming to this conclusion, we have carefully considered the feedback on our proposal not to require companies in this listing category to obtain prior shareholder approval for a related party transaction. As with significant transactions, we fully recognise the objections from buy-side stakeholders and have engaged extensively to understand their concerns further. We would like to thank these stakeholders for their time and thoughts. We accept their argument that not including the premium listing voting mechanism for related party transactions does remove independent shareholders’ ability to intervene and veto a proposed transaction (unless a majority of them support it). We also recognise the concern that such a transaction will, or may, redirect value from shareholders to related parties, or is not in the best interests of the company. We consider that the impact of our proposals would place more emphasis on boards to manage potential conflicts of interest effectively and make decisions that preserve or increase (rather than erode) shareholder value, in accordance with their general duties under applicable law and within the company’s own internal governance arrangements. These arrangements would have to meet the requirements we proposed in UKLR 8 (retained from premium listing) that for proposed related party transactions that meet the 5% threshold on the class tests, the board must first come to a view that the transaction is fair and reasonable as far as security holders of the company are concerned, and for conflicted directors not to take part in that decision. A sponsor must also provide written confirmation that the transaction is fair and reasonable before the transaction can proceed, which provides independent oversight by a firm approved by the FCA to act as a sponsor (who must be either FCA

authorised or a member of a designated professional body). In addition, our proposal to retain annual reporting against the UK CGC, which we have now confirmed in final rules (see Chapter 9), would provide general transparency as to an issuer’s governance arrangements. We consider that, taken together, these governance requirements (which we retain in UKLR) establish a robust and transparent framework for related party transactions in this listing category, continuing to support the long-established purposes of these rules. We would note that our changes would not change the company’s obligations to its shareholders at law or the directors’ fiduciary duties. There would also be continued disclosure provided to the market with both a notification of a transaction as soon as possible after it is entered into, and subsequently as part of applicable annual financial reporting requirements. More broadly, investors will have transparency on relationships and interests of directors and the presence of any controlling shareholder(s) through other required disclosures, which also allows the potential risk of related party transactions to be factored into investors’ valuation or investment decisions. From our engagements, we have also heard issuers’ concerns around the costs and uncertainties created by the premium listing requirements for prior shareholder approval of related party transactions, which are not required in other jurisdictions. While these concerns were not as strongly expressed as for significant transactions, we understand they are still viewed as important considerations in deciding whether to pursue or retain a UK listing and may be more restrictive for companies with certain capital structures. We recognise that other international markets typically don’t impose votes via listing requirements, nor do they necessarily mandate an independent, third-party opinion from an entity akin to an FCA-approved sponsor. We disagree with the respondents who suggested that the lack of shareholder vote should be viewed as a reduction in the standards of corporate governance. We note that our final rules represent an uplift to requirements for companies in standard listing and we consider that, taking into account the support for the sponsor’s fair and reasonable opinion, they strike a proportionate balance while maintaining high standards in our rules for the company’s conflicts management in relation to related party transactions. Looking across international jurisdictions, a combination of disclosure, appropriate governance by company boards, and a third-party opinion are comparable protections to other major markets, including the EU. In response to more limited comments, we have decided not to remove the exemption from the related party requirements for transactions entered into in the ‘ordinary course of business’. We continue to consider it reasonable to allow companies to enter into more routine transactions aligned to its general commercial
activities without triggering specific additional obligations, even if involving a related party.

Sponsor role on related party transactions
7.15 In Q16, CP23/31 we asked:
Question 16: Do you agree with how we have framed the sponsor role for related party transactions in the commercial companies category?
7.16 We received around 15 responses on this question. Most of them expressed support
for retaining the sponsor’s involvement as proposed although there also were some nuanced views from a small number of these respondents.
7.17 Some advisors considered that issuers should have more flexibility in who to appoint. For
example, a reporting accountant proposed that other advisors should be able to provide the fair and reasonable opinion. There were also questions over the parameters of the sponsor’s role when engaging with the FCA on related party matters, and when other advisors could contact the FCA instead.
7.18 We also noted that the members of the trade body who would have preferred to apply the
separate DTR 7.3 related party regime to commercial company equity issuers over the proposed UKLR regime were in effect advocating for a regime without a formal sponsor role.
7.19 Buyside stakeholders also offered varying perspectives. Whereas one trade body
would have also preferred to keep further aspects of the premium listing approach (with a sponsor firm appointed from the outset to guide an issuer on its LR, DTR and MAR obligations), another agreed with our proposals. An advisor also preferred that the sponsor should continue to provide a fair and reasonable opinion on related party transactions below the 5% threshold on the class tests, carrying over the premiumlisting approach, but acknowledged this may have little impact in practice.
7.20 Sponsor firms raised some specific concerns on how their role might evolve in the new
regime. One firm raised the concern that a company might shop around for a favourable ‘fair and reasonable’ opinion where another sponsor had previously disagreed. They suggested UKLR should legislate to prevent this. Our response:
We consider that the sponsor’s fair and reasonable opinion is highly valued and have finalised our rules as consulted on. This maintains a requirement from premium listing that does not apply to standard listed companies. It ensures an independent third party assesses the transaction from the shareholders’ standpoint and provides confirmation to the company’s board. As sponsors are subject to our rules, they must act with due care and skill in doing so. We will continue to engage with sponsor firms to gauge their views on how the new regime is bedding in, understand their experiences and any concerns that develop. It remains open to all issuers to seek a sponsor firm’s guidance on whether a proposed transaction is a related party transaction under UKLR 8, and on the application of our rules to that transaction, but it is not mandatory.

While we acknowledge above the concerns that attach to the specific risks related party transactions may pose to shareholder value, it remains the responsibility of the issuer to understand and meet its obligations which we emphasise in the Listing Principles. Other clarifications and amendments on related party matters
7.21 In Q17, CP23/31 we asked:
Question 17: Do you agree with the other clarifications, ancillary changes and consequential amendments we are proposing for the related party transaction requirements in the UKLR (compared with current premium listing)? If not, please explain the areas you disagree with.
7.22 With respect to the other changes, we proposed that would modify the approach
in premium listing, there was support for raising the threshold for the definition of a substantial shareholder from a 10% to 20% interest, although one buy-side advisor disagreed. Similar concerns were raised on how we drafted the proposed new provisions on ‘ordinary course of business’ as discussed in Chapter 5 on significant transactions.
7.23 Some practitioners also highlighted some very narrow interpretation points on premium
listing requirements that we had proposed to carry forward into UKLR, around intra-group transactions, the differences in the Companies Act definitions of ‘subsidiary’ vs ‘subsidiary undertaking’, and when shareholdings held under management must be aggregated. Our response:
We have finalised our rules broadly as consulted on, save that we have amended the provisions on ‘ordinary course of business’ to align with the changes we have made for significant transactions in UKLR 7. We were interested to hear the broader feedback on more technical points, and will consider these in due course. However, we did not consider these points to be sufficiently material to address in the short term given the wider context of the substantial reforms being implemented. Issuers may still contact us through their sponsor should they require individual guidance on a transaction.
7.24 In Q18, CP23/31 we asked:
Question 18: What are your views on retaining our specific listing rule definition of a related party, versus a definition based on IFRS (or other) accounting standards?

7.25 We received feedback from 14 respondents, offering a range of perspectives. Opinions
were divided.
7.26 Most acknowledged that moving to a single definition of a related party, aligned with
UK-adopted IFRS for example, could be useful for most issuers in the commercial companies category. These companies would already be familiar with the definition because of their corporate annual reporting obligations, reducing the need to seek guidance from a sponsor on whether a transaction fell within the definition. Therefore, many supported moving to an IFRS definition in place of a UKLR definition. This would reduce complexity in our rules and associated costs. A shareholder trade body also told us that the consistency in reporting would be valued by investors.
7.27 Others were less persuaded of the potential benefits. Sponsor firms preferred the
bespoke definition, one pointing out that the other proposed changes to the related party regime in UKLR (compared to premium listing) were sufficient to solve the existing problems with the premium listing regime. The related party regimes in premium listing LR 11 and DTR 7.3 served different purposes. Another trade body representing investors was concerned that the prescriptive approach to the definition in accounting standards may not be suitable for the proposed UKLR regime which is more principles based. Reporting accountants and lawyers were similarly divided, with one additional view being that shifting to an accounting-based definition may lead to an unintended consequence of accountants advising on the application of our rules, as opposed to sponsors. Our response:
At this stage, we have decided to retain the existing definition of ‘related party’ as we consulted on. However, we valued the thoughtful engagement and feedback received. Recognising that moving away from the current definition of related party to one based in accounting standards would be a material change, it would benefit from more detailed analysis of the potential implications. If we later considered any change, we would consult further.

Chapter 8
Commercial companies category – further share issuances, share buy-backs, other matters requiring a shareholder vote and circular content
8.1 In this Chapter we describe the feedback received on our proposals on a range of
transactions in a company’s shares and matters requiring a shareholder vote, and our response. While CP23/31 also included a discussion on the election and re-election of independent directors alongside these topics, here we have addressed this as part of the controlling shareholder feedback in Chapter 4.
8.2 Our final rules are in UKLR 9 and UKLR 10 in Appendix 1.
Further share issuances
Our proposals
8.3 We proposed to carry forward the premium listing approach to further share issuances
into the continuing obligations for issuers with equity shares listed in the commercial companies category as part of UKLR 9. This meant retaining rules around pre-emption rights and discounted share issuances to ensure shareholders had an opportunity to vote on transactions that would dilute their interests or reduce the value of their shares. We also proposed to keep requirements from our premium listing rules relating to some ancillary matters including around the conduct of relevant transactions. Summary of feedback and our response
8.4 In Q19, CP23/31 we asked:
Question 19: Do you agree with our proposed approach to matters relating to further share issuances for the commercial companies category? If not, please explain what you disagree with and why.
8.5 We received 17 responses, predominantly from practitioners (advisory community) and
trade bodies and exchanges, dealing with some or all aspects of these proposals. On balance most agreed with our proposals in full.
8.6 Fourteen of the 16 who responded on our proposal to carry over pre-emption rights
agreed. Fourteen of the 17 respondents agreed with carrying over rules on discounted share issuances. Those who told us why they agreed cited investor-protection.

8.7 Two trade bodies representing issuers disagreed with both of these proposals.
8.8 One pointed out differences with overseas jurisdictions on pre-emption rights, and
that the rules would make UK listings less attractive for overseas issuers. It suggested that it should be a matter for disclosure whether a company had pre-emption rights in its constitution, which would enable investors to appraise the dilution risk. It also considered that the rules on discounted share issuances were unnecessary as the question of whether to invest in a new issue of shares where the discount is more than 10% is ultimately one for investors. This view was shared by panels advising the FCA on listing-related matters.
8.9 The other trade body felt that the FCA’s proposals did not strike the right balance
and would be unattractive for smaller companies. In particular, on the discounted share issuance rules, it suggested raising the discount threshold (that triggers the requirements for shareholder approval) from 10 to 30%. It was also suggested that the benefits of any new flexibility for further issuances (flowing from possible changes to prospectus requirements under POATR proposals) could be undermined by restrictive listing requirements on share issuances.
8.10 On the discounted share issuance rules, we also received feedback from City
practitioners on problems with the existing premium listing LR 9.5.10R carried forward to UKLR 9.4.13R, as a cause of friction and requesting interpretive guidance and for the rules to be modernised.
8.11 Those who responded on the other points either agreed or raised no objections.
Our response:
We have finalised our rules as consulted on. However, we welcome the detailed feedback on where the rules can cause friction and will reflect on this further as we monitor more generally how the new UKLR regime beds in. We would consult should we consider making any further changes.
8.12 In Q20, CP23/31 we asked:
Question 20: Do you agree that an issuer in the commercial companies category should be required to appoint a sponsor in connection with its further share issuance prospectus and related application for listing?
8.13 We received 11 responses to this question, 9 in favour and 2 disagreeing. The objections
came from a law firm and a trade body representing advisors to UK-listed companies. They considered the sponsor’s role should be limited to advising new applicants for listing, and that a sponsor should not need to be appointed in relation to a secondary raising, as an issuer will have experience in its ongoing obligations as a listed company. The trade body cited support for Recommendation 9 of the UK Secondary Capital Raising Review.

Our response:
We have finalised our rules as consulted on. Given the present process for admitting further issuances to listing involves a further application to the FCA, we consider sponsors can help support issuers in this process and note the support for retaining this role. However, we may revisit this in due course as we proceed to consult on proposals to bring in the new rule framework to support the public offers and admissions to trading regime, which will include a consideration of when to require prospectuses for further issuances. As part of this work, we are interested to explore whether a requirement to apply to the FCA for listing of fungible securities where securities of that class are already admitted to the Official List and admitted to trading on a regulated market remains necessary, particularly if no prospectus is needed. If we were to consider removing this process in due course, it may also suggest a sponsor role is no longer relevant or needed for further issuances. Share buy-backs Our proposals
8.14 We proposed to retain the substance of the current LR 12 requirements for premium
listed shares on the basis that they offer protections against dilution and transactions with related parties, although we extended the alleviations on the content of the circular currently required to support the vote on an issuer’s purchase of own shares, including no longer requiring a working capital statement or FCA approval of the circular, and no longer requiring a sponsor to be appointed for such a circular, in line with the proposed changes to the significant transaction disclosures. Summary of feedback and our response
8.15 In Q21, CP23/31 we asked:
Question 21: Do you agree with our approach to share buy-backs for the commercial companies category and the amendments proposed versus premium listing requirements? If not, please explain and suggest and alternative approach.
8.16 We received comparatively little detailed feedback in response to this question with the
majority of respondents either supportive or providing no comment.
8.17 We received feedback from one stakeholder, comparing the existing UK regime to the
US’s Accelerated Share Repurchase regime, and suggesting that boards of issuers should be further educated on the economics of share buy-backs, and should consider

a purchase price limit or a valuation discount/premium limit when executing buy-backs; and further that asset managers should evaluate the buy-back execution strategies and performance of their portfolio companies. Our response:
We are finalising the rules as consulted. We do not consider that board governance and asset manager evaluation of buy-back performance is a matter for regulatory intervention through the UKLRs. We will continue to keep evolving market practice under consideration and may review these rules at a later stage. Employee share schemes, long-term incentive plans and discounted option arrangements Our proposals
8.18 We consulted on the basis that approval of matters currently set out in LR 9.4 (employee
share schemes, long-term incentive plans and discounted options arrangements) would still be subject to a shareholder vote under the UKLR applicable to the commercial companies category. Summary of feedback and our response
8.19 In Q22, CP23/31 we asked:
Question 22: Do you have any comments on our proposals? Do you have any views on requiring shareholder approval to grant to a director or employee options, warrants or other similar rights to subscribe in shares in the commercial companies category?
8.20 We received comparatively little detailed feedback in response to this question with
the majority of respondents either supportive or providing no comment. One sell-side representative organisation argued that the FCA should provide as much flexibility as possible to ensure the competitiveness of the UK as a listing destination especially visa-vis the US. Another membership organisation representing issuers commented that they were supportive of shareholder approval for the application of employee share schemes but not for the individual granting of these schemes and asking for clarity from the FCA on the extent to which the proposed changes apply to directors. Their view is that remuneration committees ought to make determinations on the grant of individual awards within the boundaries of the schemes agreed by shareholders. A professional services firm provided more colour, sharing their view, which echoed feedback to CP23/10, that amendments should be made to the provisions of the shareholder approval requirements for discounted options arrangements currently set out in LR 9.4.4R.

8.21 This is because, even where the scheme has been approved by shareholders under
LR 9.4.1R, LR 9.4.4R(2) (both of which have been replicated in UKLR 9.3) requires the company to seek shareholder approval again each time that it grants a nominal cost option to subscribe shares under its shareholder approved scheme. This respondent suggested that this creates a degree of duplication and redundancy which could be addressed by excluding from the scope of UKLR 9.3.4R(1) options or warrants to subscribe for shares or other similar rights to subscribe for shares which are to be granted under an employee share scheme or long-term incentive scheme which has already been approved by shareholders under UKLR 9.3.1R. Our response:
We are finalising the rules as consulted. We are open to giving consideration to potential changes to our rules, including as regards the issuance of discounted share options, where market practice has evolved to such an extent as to make some of our requirements less relevant. However, given the limited feedback on this, it did not appear to be a priority for change at this stage. We may review these rules at a later stage. Requirements for other circulars Our proposals
8.22 In CP23/31, we sought view on proposals to include existing rules in LR 13.8 in the UKLR.
These rules set out requirements for circulars related to a number of matters which address:

authority to allot shares
disapplying pre-emption rights
reduction of capital
capitalisation or bonus issue
scrip dividend alternative
scrip dividend mandate schemes/dividend reinvestment plans
notices of meetings
amendments to constitution,
employees’ share schemes
amendments to employees’ share scheme
discounted option arrangements
reminders of conversion rights, and
election of independent directors
Summary of feedback and our response
8.23 In Q23, CP23/31 we asked:

Question 23: Do you have any comments on our proposals with regard to requirements for other circulars? If you disagree, please explain why, and include suggestions for alternative approaches.
8.24 We received very little detailed feedback in response to this question, with stakeholders
either silent or in support of our approach.
Our response:
We consider these rules remain helpful in ensuring transparency to shareholders and we are finalising them as consulted.

Chapter 9
Commercial companies category – annual reporting and governance
9.1 In this Chapter we describe the feedback we received on our proposals presented in
Chapter 11 of CP23/31 on annual reporting and disclosure requirements that would
form part of continuing obligations for the commercial companies category, and our response. Our final rules are in UKLR 6 in Appendix 1. Our proposals Corporate governance reporting
9.2 In CP23/31 we reiterated the proposals set out in CP23/10 for continuing obligations on
issuers within the commercial companies category, as follows:

To apply the existing premium listing provisions relating to the UK Corporate
Governance Code (UK CGC), which include requiring a company to include additional items in its annual financial report to include, among other things:
– a statement of how the listed company has applied the Principles set out in the UK CGC, and – a statement as to whether the listed company has complied throughout the accounting period with all relevant provisions set out in the UK CGC, or details of those provisions it has not complied with and why
9.3 We also discussed flexibility inherent in the UK CGC and FRC guidance for issuers that
may choose to apply or be subject to another corporate governance code to still meet the principles while explaining an alternative approach the provisions of the UK CGC (see paras 11.11-13 of CP23/31).
9.4 Furthermore, we explained that for overseas issuers with a secondary listing in the UK,
the proposed secondary listing category would address concerns raised in the feedback to CP23/10 as we proposed to rely on compliance with DTR 7.2 for this category, as for existing standard listed issuers. DTR 7.2 provides more flexibility by focusing on disclosure of any corporate governance code applied by an issuer, or any other corporate governance arrangements that go beyond national law. Climate related financial disclosures, diversity disclosures and other annual report disclosure requirements
9.5 As set out in Chapter 11 of CP23/31, we proposed to carry over for the commercial
companies category key comply or explain annual disclosure requirements related to diversity of boards and climate-related financial disclosures consistent with the Task Force on Climate-related Financial Disclosures (TCFD). This was consistent with our

intention to have a highly transparent, disclosure-based approach to ensure investors have the information they need.
9.6 We also proposed to apply other annual financial reporting requirements contained in LR
9.8 for the commercial companies category where they remain relevant. Some of these
relate to reporting linked to other ongoing Listing Rule requirements in LR 9 or derive from aspects of the UK Companies Act 2006 or UK CGC. Summary of feedback and our response
9.7 In questions 24 and 25 of CP23/31, we asked:
Question 24: Do you agree with our overall approach to annual disclosures and reporting requirements for the commercial companies, category broadly based on current premium listing requirements, including on corporate governance (see
Appendix 1, UKLR 6)? If not, please explain why.
Question 25: Would formal guidance clarifying the use of ‘explain’ when reporting against the UK CGC be necessary?
9.8 We received in the region of 20 responses to these questions, the majority of which
supported the proposals.
9.9 In relation to the corporate governance proposed reporting requirements, most felt
additional FCA guidance to clarify the use of ‘explain’ when reporting against the UK CGC would not be helpful, with some noting that this is the remit of the FRC. A few also commented that the use of ‘explain’ does not reduce the burden on certain issuers (eg smaller issuers), and further guidance on ‘explain’ would not address that point specifically. One respondent suggested a size threshold below which an issuer could opt to report against a different code. Another suggested the proposed approach to corporate governance reporting in the proposed secondary listing category (ie, reliance on DTR 7.2), also be applied to the commercial companies category.
9.10 Some expressed the view that there were missed opportunities to streamline the
current requirements in LR 9.8, to either reduce the degree of overlap with non-listing rule reporting obligations to which companies are subject, or because they lack benefit to investors. Our response:
Corporate governance disclosures
Having considered the feedback, we have proceeded to implement the proposals as consulted on. This means issuers in the commercial companies category will be required to state, on an annual basis, how they have complied with the Principles of the UK CGC and whether they

have complied with the Provisions of the UK CGC throughout the relevant accounting period and, if not, the provisions they have not complied with and the reasons for non-compliance. We view compliance with the Principles of the UK CGC as appropriate for all commercial companies to underpin good corporate governance practices. Further disclosure against the provisions of the UK CGC will provide important detail on the governance arrangement companies have in place. Transparency of governance structures and processes is consistent with our broader approach and will enable investors to assess and price in any risks (or value) they perceive in certain corporate structures. It will also incentivise issuers to meet these standards as a result. We have not introduced a company size threshold below which more flexibility is explicitly provided for. This is because factors such as size of issuer and their stage of development are already relevant to the degree to which an issuer may depart from certain UK CGC Provisions. This approach recognises that an alternative to complying with a Provision may be beneficial or necessary for the company in particular circumstances based on a range of factors. However, we do recognise that some smaller or newer issuers may face challenges in complying in full with all of the UK CGC Provisions, and that the more an issuer departs from the UK CGC Provisions, the more explanation would be required. Demonstrating good governance through high-quality explanations can provide companies with the opportunity to display how their unique governance arrangements support the delivery of continued shareholder value. We consider a different approach for the secondary listing category is justified as this is intended to address concerns raised in response to CP23/10 regarding non-UK incorporated issuers that follow the corporate governance code of another jurisdiction. Other annual disclosures We continue to view climate-related financial disclosures and diversity disclosures as important features of our regime to support market integrity, as investors’ interest in these areas increases. For the time being, we also consider the broader periodic disclosures from our premium listing rules to be an appropriate starting point for all commercial companies. We will, however, consider in due course if there are further opportunities to streamline annual reporting requirements, as suggested by some respondents. This may also take into consideration any future reforms to UK company law or regulation eg, related to non-financial reporting, that may be taken forward by the new Government.

Chapter 10
Approach to current premium listed categories: sovereign controlled commercial companies and closed-ended investment funds
10.1 In this Chapter we describe the feedback we received on our proposals presented in
CP23/31 in Chapter 12 and our response.
10.2 For sovereign controlled commercial companies who are listed in the commercial
companies category, our final rules set out certain modified requirements in UKLR 5, 6, 8 and 9.
10.3 Our final rules for closed-ended investment funds are in UKLR 11 in Appendix 1.
Sovereign controlled commercial companies
Our proposals
10.4 We proposed to not carry forward the dedicated category for sovereign controlled
commercial companies (SCCs), and instead to provide certain modifications for SCCs within the equity shares (commercial companies) category. We set out a number of modifications that SCCs could benefit from if they made a notification to inform the market of the changes that the dispensations would entail for shareholders.
10.5 In summary, we proposed to disapply a number of commercial companies category
requirements, including:

eligibility and ongoing requirements for a sovereign controlled company to be
independent from their sovereign controlling shareholder
a requirement to have in place a controlling shareholder agreement
requirements for disclosure in annual financial reports detailing any contract for
the provision of services to the listed company
requirements for sponsor fair and reasonable opinions where a related party
transaction is contemplated and the sovereign controlling shareholder is the related party, and requirements to prevent a director who is, or an associate of whom is, the related party from taking part in the board’s consideration of the transaction or arrangement or voting on the relevant board resolution, and
we also said that commercial companies with a sovereign controlling shareholder
should be able to benefit from the more flexible approach to multiple class share structures proposed in CP23/31

10.6 Finally, we set out the view that the appropriate category for certificates representing
shares in a SCC would be the category for certificates representing securities (UKLR 15, formerly LR 18). Feedback and our response
10.7 We asked:
Question 26: Do you agree with our proposed approach to incorporating sovereign controlled companies into the commercial companies category, with certain alleviations on matters related to the sovereign controlling shareholder, while not taking forward a bespoke approach to depositary receipts on shares in such issuers? If you disagree, please explain why.
10.8 We received limited feedback to these proposals. One buy-side trade association voiced
concerns that admitting to listing sovereign-controlled companies in the commercial companies category (and allowing them to be governed through DCSS structures) would increase the number of related party transactions. This, in their view, would limit the ability of independent shareholders to scrutinise such entities and exercise effectively their ownership rights.
10.9 A representative body for the legal advisory community reported differing internal views on
our proposals with some members agreeing with the approach, including in relation to the targeted alleviations. These members were of the view that, given the nature of sovereign controlled companies, the appropriate approach, as proposed by the FCA, is to ensure full disclosure of the nature of the relationship and the arrangements between sovereign controlled companies and sovereigns rather than to seek to regulate such relationships through listing regime protections that are more appropriately applied to non-sovereign controlled commercial companies. Other amongst their members, however, argued that it was unclear why transactions with a sovereign controlling shareholder should be treated differently from those of other types of controlling shareholders, particularly in light of the significant relaxations proposed for the related party regime. Our response:
We have decided to proceed as consulted on. The alleviations we have provided within the commercial companies category mirror those currently available to sovereign controlled companies in LR 21, to the extent they remain relevant. Not introducing them would entail a more rigid approach, which would not be aligned to the spirit of the overall reforms and would also run counter to the original policy intention when introducing LR 21. We will also proceed to remove specific provisions for depositary receipts issued by sovereign controlled companies. Since we are removing the premium and standard listing segments, we do not see a need to have a specific regime for such instruments. Sovereign controlled companies can still list depositary receipts in UKLR 15 going forward.

Closed-ended investment funds
Our proposals
10.10 We proposed to carry forward a separate category for equity shares of closed-ended
investment funds in the new UKLR sourcebook, and to broadly retain the current LR 15 eligibility and continuing obligations provisions for significant and related party transactions, with certain changes, most notably that for transactions or arrangements with a related party that are within the scope of the closed-ended investment fund’s published investment policy, prior shareholder approval would not be required even where a percentage ratio is ≥5%, although an issuer would need to obtain a sponsor fair and reasonable opinion where a percentage ratio is ≥0.25%. We proposed to retain the requirements of Premium Listing Principles 3 and 4 as new rules applicable to closedended investment funds.
10.11 In response to specific feedback, we proposed that the rules on board independence
would clarify that notwithstanding an appointment to the board of more than one listed closed-ended investment fund that has engaged the same independent alternative investment fund manager (AIFM), a director can be considered independent where the AIFM is independent of the closed-ended investment fund’s investment manager.
10.12 We also proposed that the sponsor role in relation to closed-ended investment funds
would be retained in the UKLR and broadly remain unchanged. As with commercial companies, a sponsor appointment would be required for any requests for individual guidance from the FCA, or for the waiver or modification of the significant transactions regime, including the class tests, or the related party transactions regime. We proposed that the sponsor role would also be retained in line with the commercial companies category for any other aspect of the significant transactions regime and the related party transactions regime as applied to closed-ended investment funds. Feedback and our response
10.13 As closed-ended investment funds are a specialised area, we received specialist
feedback from practitioners and trade bodies with particular expertise and experience in this area, representing the viewpoints of issuers, investment managers, and investors. We also received feedback through the FCA’s Funds Forum.
10.14 As with CP23/31, some feedback suggested that we should consider merging the
closed-ended investment funds category and the new commercial companies category. However, overall, there was little support for such a move from the majority and a strong consensus in favour of retaining a separate UK listing category for closed-ended investment funds.
10.15 Specialist feedback was also strongly appreciative of the clarifications to the rules on
independence of directors vis-à-vis independent AIFMs.
10.16 However, there was broad consensus among specialist practitioners and stakeholders
that the divergence between the commercial companies and closed-ended

investment funds categories where it came to the significant transactions and related party transactions regime was inappropriate. Practitioners felt that if closed-ended investment funds were not able to benefit from the changes being proposed to the commercial companies category in this regard, this would create an undesirable arbitrage between these categories.
10.17 Stakeholders were of the view that whilst there were many areas where a divergence was
justified, for example, conduct rules ensuring boards of directors can act independently of any third-party investment manager, to address the fact that boards of closed-ended investment funds are largely non-executive, however, where it came to the proposed requirements for significant and related party transactions, the rules as proposed would seem to suggest, incorrectly, that the risk of transactions undertaken by closed-ended investment funds was somehow greater than equivalent transactions undertaken by commercial companies.
10.18 Respondents noted that closed-ended investment funds are required to invest in
accordance with their investment policy, and any significant change in investment policy requires shareholder approval. They noted that the controls already applied on closedended investment funds by the rules on board independence and the requirement for an investment policy made imposing additional controls on transactions undertaken by closed-ended investment funds versus those undertaken by commercial companies inappropriate. A consensus emerged that controls and safeguards in relation to changes to the investment manager’s fees should, however, be retained, as such transactions do not exist for commercial companies and pose a greater risk than other transactions.
10.19 We also received feedback requesting clarification that a transaction within the scope
of the closed-ended investment fund’s published investment policy includes the acquisition or disposal of another entity the sole purpose of which is to hold assets that fall within the scope of the closed-ended investment fund’s published investment policy. Our response:
We are finalising the rules to retain a separate listing category for closedended investment funds. Responding to specialist feedback, we will align the significant and related party transactions regime for closed-ended investment funds more closely with that for commercial companies, and will not require separate shareholder approvals or circulars for the majority of such transactions, instead cross-applying the disclosure regime for such transactions as it applies to the commercial companies category. However, we will retain additional requirements for changes to the investment manager’s fees or other remuneration, requiring a sponsor’s fair and reasonable opinion at ≥0.25%, and shareholder votes and related circular requirements for changes of ≥5% or above, as well as uncapped fees. Otherwise, the sponsor role will continue to apply at the gateway and for continuing obligations as with commercial companies. We will implement the clarifications to board independence as consulted on.

In relation to the acquisition and disposal of entities the sole purpose of which is to hold assets within the scope of the closed-ended investment fund’s investment policy, we consider that the UKLR Sourcebook is not the appropriate vehicle for such clarifications, but we take this feedback into account and intend to publish technical guidance on this area in due course.

Chapter 11
Approach to current standard listing categories
11.1 In this Chapter we describe the feedback we received on our proposals presented
in Chapter 13 of CP23/31 on our proposed approach for listings of other issuer or instrument types that are currently listed under our standard segment, and our response. Our final rules are in Appendix 1, in:

UKLR 12 – open-ended investment companies category
UKLR 13 – shell company category
UKLR 14 – secondary listing category
UKLR 15 – certificates representing certain securities (depositary receipts) category
UKLR 16 – non-equity shares and non-voting equity shares category
UKLR 17 – debt and debt-like securities
UKLR 18 – securities derivates category
UKLR 19 – warrants, options and other miscellaneous securities category
UKLR 22 – transition category
Transition category for existing standard listed issuers of equity shares in commercial companies Our proposals
11.2 We proposed creating a new ‘transition category’ to maintain the status quo for existing
commercial companies that are issuers of standard listed shares, and that would not be eligible for the secondary listing category, shell companies category or the nonequity shares and non-voting equity shares category. The category would carry forward current continuing obligations under LR 14 to the proposed transition category.
11.3 We proposed that it would be closed to new applicants and to transfers from other
categories, so has no eligibility requirements. We also proposed that if any issuers in this category carried out a reverse takeover, they would need to transfer to another listing category to retain a UK listing. We proposed no sponsor role in relation to any continuing obligations, with a sponsor only being relevant if an issuer sought a transfer to another category for which one is required – we also proposed a modified transfer process in such cases (see Chapter 14 for more details). We also indicated that, if we proceeded, should an issuer in the transition category fall within scope of the closed-ended investment funds or open-ended investment companies categories once the new UKLRs were in force, they must apply to transfer to that category based on our retained transfer process (as per LR 5.4A).

11.4 The transition category would have no end date at the point of implementation and no
deadline for issuers to transfer out of the category, but instead we would keep it under review. Summary of feedback and our response
11.5 In question 28 of CP23/31, we asked:
Question 28: Do you agree with our proposals for the transition category? If not, please explain why.
11.6 We received 20 responses to this question, a majority of which agreed with our
proposals, with some drafting suggestions made to help clarify the proposed rules.
11.7 Some requested clarity on how long the transition category is likely to remain, with a
few also suggesting it should not have an end date at all. Two respondents requested clarification as to whether the category was only available to issuers for whom their current listing was their ‘primary’ listing (ie they felt it was implied that a secondary listing that was not eligible for the secondary listing category would not be accommodated in the transition category). These respondents said it should not be so restrictive or binary in that case. Two other responses said that issuers with listings in this category if undertaking a reverse takeover should be able to apply for re-admission to the transition category if that are not able to meet the eligibility requirements of the commercial companies category.
11.8 A couple of respondents raised concerns about the modified transfer process available
to eligible issuers in the transition category and in particular the proposal not to require a financial prospects and position procedures assessment.
11.9 A small number of respondents also felt the name ‘transition category’ was not
appropriate, with one suggesting ‘legacy category’ as an alternative. Our response:
We have made the rules as consulted on, with minor amendments to ensure consistency and clarity of drafting. We can clarify that the final rules do not limit the scope of the transition category to ‘primary’ UK listings. Rather, the reference in paragraph
13.9 of CP23/31 was intended to reflect the fact that we were also
proposing a secondary listing category as part of the restructuring of the listing categories. Other than in the eligibility criteria and the continuing obligations of the secondary listing category, the new listing structure does not make a distinction between something that is ‘primary’ or ‘secondary’ listed in the UK. We have and will continue to engage with issuers where necessary with regard to how they are ‘mapped’ to either the transition or international secondary listing category prior to implementation.

We do not agree with feedback that issuers listed in the transition category that undertake a reverse takeover should be permitted to apply for re-admission to list in the transition category. Our reason for this is that this category serves a specific purpose to aid transition to the new listing structure and is intended to be closed to new listing applications. We have set no end date for the transition category at this time and no deadline for issuers to transfer out of the category. Any decision to wind it down at a future date will take into account the number of issuers that remain listed there. We would also publicly consult before removing the category and provide sufficient time for any remaining issuers to consider their options. See Chapter 14 for our response on the proposed modified transfer process. Secondary listing category Our proposals
11.10 In Chapter 13 of CP23/31 we proposed introducing a new secondary listings category
for the equity shares of non-UK incorporated companies that sought a ‘secondary’ listing in the UK (ie they already had at least one other equity listing on another market). The intention was to ensure the new listing structure remains accessible to non-UK incorporated companies where either domestic company law or rules flowing from their ‘primary’ listing venue may mean they would not be eligible for the commercial companies category. By having a discrete category for such listings, it provides transparency that such issuers are subject to a combination of home jurisdiction and FCA rules.
11.11 We proposed that the eligibility and continuing obligations for the secondary listing
category would largely replicate LR 14, subject to targeted additional eligibility requirements, which would also largely apply as continuing obligations. These included the category being limited to overseas incorporated companies, and an issuer’s location of central management and control being either in their country of incorporation or the country of their primary listing. Please see Chapter 13 of CP23/31 for more detail.
11.12 We also proposed that issuers in this category must:

continue to comply with the applicable rules of the overseas main market (their
primary listing) to which they are subject, and
contact the FCA as early as possible to discuss whether suspension, cancellation
or restoration under the UKLR is appropriate if an issuer’s listing has been suspended, cancelled or restored by an overseas exchange or overseas authority
11.13 We proposed to carry over the substance of the existing listing requirement currently
in LR 14.2.4R, which indicates that where an applicant does not have a listing either in

its country of incorporation or where a majority of its equity shares are held, the FCA will not admit a listing to the secondary listing category unless it is satisfied that the absence of the listing is not due to the need to protect investors.
11.14 In addition, we proposed guidance to clarify that we may ask applicants to provide an
explanation for establishing its listing elsewhere if it does not have a primary listing in its country of incorporation. We also indicated in guidance that we may seek board confirmation of the applicant’s compliance, and of no historic issues, with the applicable rules of the overseas main market to which they are subject.
11.15 In tranche 2 of our draft rules published in March 2024, we also proposed to disapply
the requirement regarding the location of central management and control and the definition of a qualifying home listing for existing issuers and in-flight applicants. Summary of feedback and our response
11.16 In questions 29 and 30 of CP23/31, we asked:
Question 29: Do you agree to our proposals for a secondary listing category and the related requirements, including basing rules on current LR 14 with certain additional elements, and the maintained application of DTR 7.2? If not, please explain which aspects you disagree with and why. Question 30: Do the proposed eligibility requirements for the secondary listing category sufficiently identify commercial companies with a ‘primary’ listing in another jurisdiction and mitigate potential risk that it be used to avoid the commercial companies category? Please suggest improvements to provisions, or additions or alternatives, as relevant.
11.17 We received 20 responses to these 2 questions, with a majority agreeing with the
proposed approach. Of the minority that made comments or expressed disagreement the following were the main points arising.
11.18 A handful of respondents queried why UK incorporated companies with an overseas
listing would be excluded from this category. The respondents here suggested that the place of incorporation is not relevant to secondary listing status. Similarly, a small number of respondents queried how UK incorporated companies with an overseas listing would be accommodated in the proposed new listing structure. A couple of respondents also noted the exclusion of UK incorporated companies was not necessary as they felt the risk of issuers using the secondary listing category to avoid listing in the commercial companies category was low in practice.
11.19 Five responses also raised concerns about the proportionality of applying TCFD-related
reporting requirements to this category and overseas issuers’ ability to comply with these in practice.

11.20 A similar number said the eligibility criterion concerning the location of the issuers
central management and control would be restrictive and not relevant, saying it is not uncommon in practice for listing, incorporation and mind and management to be in 3 different locations. Tax residency was one example of reasons why companies may organise themselves across various locations. A couple also felt that liquidity should be included as a measure of whether something was a secondary listing or not.
11.21 A few raised significant concerns regarding the definition of ‘qualifying home listing’ and in
particular the requirement that the issuer be subject to rules of its primary listing without dispensation or modification by virtue of the applicant’s country of incorporation. It was felt this could have unintended consequences by in practice meaning an overseas issuer in the secondary listing category always having to be listed in its place of incorporation, excluding for example US Foreign Private Issuers from being eligible. There was also concern that reporting of non-compliance of primary listing rules would be complex and burdensome.
11.22 A few suggested that the FCA adopt an equivalence approach to simplify and reduce
overlaps with other listing jurisdictions.
Our response:
We have made the rules as consulted on, with some amendments set out below in response to the feedback received. The secondary listing category is specifically designed to have a limited scope, including being limited to overseas incorporated companies. The policy intent remains unchanged from that described in CP23/31. The category is designed to accommodate those overseas companies where either domestic company law or rules flowing from their ‘primary’ listing venue may make it more difficult to additionally meet certain requirements of our commercial companies category. By providing this discrete category, the intention is to ensure our listing regime remains flexible and accessible to allow such issuers to remain or choose to list in the UK. UK incorporated companies that wish to have a secondary listing in the UK will not be eligible to list in this category. However, they may be eligible for the commercial companies category. For UK companies seeking an equity listing whereby the UK is or is intended to be their secondary listing ie, where the “primary” listing is outside of the UK, the expectation is that they would apply for a UK listing in the commercial companies category. The commercial companies category is open to any issuer regardless of their place of incorporation if they are able to meet the commercial companies category eligibility requirements - it does not preclude companies that have another equity listing elsewhere. One stakeholder queried during our engagement whether admission to the commercial companies category, versus the secondary listing category, may impact a UK issuer that sought index inclusion for their ‘primary’ listing on another market. However, we did not receive detailed analysis to substantiate this issue, and we do not consider it appropriate to alter our policy on the basis that different international index providers may set certain inclusion criteria.

We have also proceeded to implement the eligibility criteria and continuing obligations for the secondary listing category as consulted with the following clarifications and modifications in response to the feedback received. Location of central management and control We have confirmed this rule as consulted on, although with some additional guidance as explained below. We agree with feedback that where an issuer’s central management and control are located is not necessarily a characteristic for determining whether something a ‘genuine’ secondary listing or not. However, we consider it important to address the potential risk of opaque and complex structures that may impair our ability to supervise issuers in this category and enforce against our rules where necessary. We may consider exceptions to this rule for issuers on a case-by-case basis by way of dispensation or modification. We have added guidance to the location and central management and control requirement to clarify that the FCA may modify the rule on a case-by-case basis in circumstances where the FCA is satisfied the issuer’s operational and governance arrangements are not intended to reduce, and do not have the effect of reducing the FCA’s ability to monitor an issuer’s compliance with the listing rules, the disclosure requirements, transparency rules and corporate governance rules, as applicable. Subject to the primary listing rules of an overseas market With regards to the requirement for issuers in the secondary listing category to be subject to the primary listing rules of an overseas market without dispensation, we have made the rules as consulted on but with a small amendment. We have removed the reference to ‘without modification’ in the definition of qualifying home listing that was included in the draft rule. This is to reflect feedback that some regimes impose additional requirements on primary listings when an issuer is treated as a foreign primary listing for the purposes of that market. It was not our intention to exclude these issuers from this category (eg, issuers treated as Foreign Private Issuers in the US) and so we have amended the rule. Other general feedback We note the feedback that requiring reporting of non-compliance of primary listing rules could be burdensome for issuers in the secondary listing category. We continue to consider this an important requirement for this category as we would have no direct supervisory oversight of an issuer’s compliance with the overseas primary listing rules to which it is subject. It is important that we have the ability to consider what is relevant or material non-compliance on a case-by-case basis. However, we will monitor the notifications received and keep the suggestion for a possible materiality threshold under review. We considered the TCFD reporting points made by a small number of respondents. Again, we have proceeded to implement the proposals as

we consulted on in CP23/31, given our intention is to maintain the status quo of the standard listing requirements for this category. We will keep this under review, particularly as we look to revise our climate-related financial disclosure rules in due course as international standards evolve from TCFD to International Sustainability Standards Board (ISSB) based disclosures and considering developments on such reporting in other jurisdictions. Transitional arrangements We have finalised the transitional provision to disapply indefinitely, as a continuing obligation, the requirement regarding the location of central management and control and elements of the definition of a qualifying home listing for existing issuers and in-flight applicants. This should enable a greater number of existing issuers to be eligible to be mapped to the secondary listing category. Please see Chapter 14 for further detail. Non-equity and non-voting equity shares category Our proposals
11.23 In Chapter 13 of CP23/31, we proposed creating a new listing category for non-equity
shares, such as retail denomination preference shares and deferred shares (as defined in the FCA Handbook Glossary), and non-voting equity shares, that are currently eligible to list under the standard listing (shares) category. We proposed that the status quo for these issuers would be maintained based on current standard listing eligibility requirements and continuing obligations. Summary of feedback and our response
11.24 In questions 31 of CP23/31, we asked:
Question 31: Do you agree to our proposals for the non-equity shares and non-voting equity shares category? If not, please explain why.
11.25 We received 10 responses to this question the majority of which were supportive of our
proposals.
11.26 A couple of respondents, who also supported the separate listing category, queried
whether the TCFD and diversity annual reporting requirements currently applicable within the standard listing segment to certain listings should be applied to this category. The concern appeared to be on grounds of proportionality, with one respondent saying that issuers of these securities often also have a listing of equity shares subject to the same or similar disclosure obligations appliable in another listing category. A further comment made was that this information would be of limited relevance to investors of these types of shares as they would generally not have voting rights and would be unable to vote on resolutions.

Our response:
We have proceeded to create and make the rules for this category as consulted on in CP23/31, including the existing approach to reporting requirements for these securities under the current listing rules. The TCFD annual reporting requirements are carried over to apply to listed companies in this category, given our intention is to maintain the status quo of the existing standard listing requirements for this category. The board diversity annual reporting requirements are carried over to apply to a company with a listing of non-voting equity shares for the same reason. In both cases, the reporting requirements do not apply to investment entities or shell companies, as is also the case currently. In the case of closed-ended investment funds, please see Chapter 10. Where a company has securities listed in more than one listing category that requires TCFD or diversity annual reporting, the reporting burden is not duplicated. Meeting requirements in relation to one listing category would also satisfy the obligation of the other, because the reporting obligations are for the issuer to make a company-level annual disclosure on these matters (ie there would be no need to disclose separately for each listing of securities). We may review the application of such requirements in due course, including if we consider further changes to TCFD reporting requirements in future to move to ISSB reporting standards. Shell companies category Our proposals
11.27 In Chapter 13 of CP23/31 we proposed a new listing category for shell companies,
including special purpose acquisition companies (SPACs). We said we intended to retain the current SPAC provisions introduced in 2021 (see PS21/10), which allow larger SPACs with certain specified investor protections in place to avoid the presumption that their listing would be suspended when a potential acquisition target is announced, or if details of the proposed acquisition have leaked.
11.28 However, we proposed to make some of the investor protection provisions within that
guidance (in LR 5.6.18AG) eligibility requirements for the new shell companies category. For details of the eligibility requirements and continuing obligations that we proposed to apply to this category, over and above the current listing requirements, see Chapter 13 of CP23/31.
11.29 In summary our proposals included:

A standalone definition of ‘initial transaction’ instead of ‘reverse takeover’.
Requiring an initial transaction needs to be completed within 24 months from the
date of admission. This timeframe would be extendable in certain circumstances.
Requiring board approval for the initial transaction before it is entered into.
Aligning the shell companies category with the notification, shareholder approval
and circular requirements proposed for commercial companies category in relation to reverse takeovers.
Upon completion of an initial transaction, requiring the shell company to contact
the FCA to apply for cancellation of its existing listing in the shell companies category and, where relevant, seek re-admission to listing of the enlarged group to a different category.
Extending the sponsor regime to this category, given SPACs and other shell
companies can have complex structures and inherent conflicts of interest between the various parties. Summary of feedback and our response
11.30 In questions 32 and 33 of CP23/31 we asked:
Question 32: Do you agree to our approach for the shell companies category and the detailed drafting in UKLR, including the proposed approach to redemption rights? If not, please explain why and suggest any alternative approach or transitional provisions. Question 33: Do you agree with the proposed approach that issuers in commercial companies category and the transition category should transfer to the shell companies category if they become eligible for the shell companies category? Do you foresee any problems with this proposed approach?
11.31 We had approximately 15 responses to these questions. While there was broad
support for having a separate listing category for shell companies (‘shells’) to support transparency and some support for our proposals for shells more generally, a smaller number of respondents raised significant concerns.
11.32 The main concern raised was that our proposals for the shell companies category were
overly prescriptive and forced all shells to adopt a certain type of SPAC model, which would reduce flexibility and present practical challenges. Related to that feedback, a small number said that clearer definitions were needed to differentiate between SPACs (of which there are various models in the market) and other shells, some of which may have an investment strategy and others that are commercial companies in winddown.
11.33 There were requests for more information about how commercial companies that
became a shell would transfer into the shell companies category.
11.34 A small number suggested allowing existing cash shells to map to the transition
category or alternatively to put in place a much longer transitional period than the

proposed 3 years, such as 5 years, to allow existing shells to make arrangements to comply with the new requirements that would apply to them.
11.35 A few said that the proposal for shareholder votes on initial transactions should not
exclude founders, directors and SPAC sponsors from the vote. This was felt to be a unique requirement that would put the UK at a competitive disadvantage to other jurisdictions. In addition to this, a couple also said that where a shell has a multiple acquisition strategy they should be treated more in line with closed-ended investment funds and each transaction should not require a shareholder vote or invoke the requirement to contact FCA regarding suspension.
11.36 In other feedback, 2 responses disagreed with the proposed ‘initial transaction’
approach, especially if the initial transaction does not utilise the majority of the shell’s cash. Two responses also disagreed with applying the sponsor regime to this category on grounds of proportionality. A further 2 submissions thought that there were better ways to protect retail investors eg, require such investors to receive financial advice before investing in a SPAC or simply ban retail investment in SPACs.
11.37 In response to the question about redemption rights, the small number of respondents
that commented on this subject agreed with our analysis and that this is an area that should be kept under review. Our response:
Having considered the feedback received, we have decided to proceed to create a separate listing category for shell companies (including SPACs), but have not implemented all of the tailored requirements we proposed. In summary, our final rules largely maintain the status quo for shell companies, including SPACs, but we have proceeded to implement our proposals regarding the concept of an ‘initial transaction’ and to require shell companies to complete an initial transaction within a specified time period. We also maintained the requirement for an issuer to appoint a sponsor in relation to admissions or transfers to this category, and when proposing to enter into an initial transaction. More specifically, we have proceeded to finalise our proposals to clarify what a reverse takeover means in practice for a shell company and to call it an ‘initial transaction’. In substance this reflects the existing definition of a reverse takeover but clarifies that, given the nature of shell companies, the first transaction that a listed shell company enters into constitutes an ‘initial transaction’, as defined in UKLR 13, and provided it falls within UKLR 13, it covers a transaction of any size. This could include the issuance of a loan, a purchase of a minority stake or entering into a joint venture arrangement. We also consider it important for market integrity and investor protection purposes to require shell companies to either proceed to make an acquisition within a specified time period or seek to cancel their listing, rather than remaining listed indefinitely. So, we have proceeded to require new applicants to this category to build into their constitution that they

will complete an initial transaction within 24 months from the date of admission, or otherwise cease operations. We have, however, provided for this initial period to be extended by a period of 12 months with shareholder approval for up to three times (eg, enabling an extension of 36 months in total beyond the first 24 months). We have also proceeded with the proposed additional 6-month extension to the time limit that can be exercised in the specified circumstances set out in UKLR 13, which are intended to address the scenario where a deal has been announced or is very near to being completed. The required time limit for an initial transaction will be deferred for 1 year for existing issuers and in-flight applicants mapped to the shell companies category at implementation of the reforms. Please see
Chapter 14 for details of this and other transitional arrangements.
We have also proceeded to implement the proposed requirement for board approval of an initial transaction to be obtained. We have retained the current rules and guidance under the existing LR 5.6.18AG, which allows bigger SPACs with certain specified investor protections in place to avoid the presumption that their listing would be suspended. These are the changes introduced in 2021 (see PS21/10). However, we have not proceeded to mandate the following criteria, as proposed, for all shell companies:

Requiring adequate binding arrangements that monies raised from
public shareholder be ring-fenced via an independent third party.
Requiring shareholder approval of an initial transaction.
Requiring an issuer’s board to publish a statement that the proposed
initial transaction is ‘fair and reasonable’ if any of its directors have a conflict of interest. We have retained our definition of shell company as set out currently in LR 5.6.5AR. Given that we are retaining the flexibility of our current rules, which accommodate a range of shell company models, we do not think it necessary to have a more differentiated definition (ie for shell companies versus SPACs). We have also clarified in our final rules and guidance that companies listed in the commercial companies category, transition category or secondary listing category that become a shell will generally be given a grace period of 12 months to remain in their existing listing category. This will provide time for them to liaise with the FCA and determine their course of action. For example, to either regain compliance with their existing listing category, cancel their listing, or transfer to the shell companies category. We have proceeded to apply the sponsor regime to the shell companies category. Shell companies can be complex, as can be the investments they offer. There are also inherent conflicts of interest that can exist between the various parties. Given all of these factors, we consider it is appropriate to apply the sponsor regime to this category, including where an issuer is:
applying for admission to list
transferring into the category, or
proposing to enter into an initial transaction
Given we have not proceeded with our proposals to require shareholder approval for an initial transaction, which maintains the current standard listing approach, the proposal for a sponsor to be appointed in that scenario and review the content of the related circular has not been implemented. Retained standard listing categories Our proposals
11.38 In Chapter 13 of CP23/31, we proposed retaining the remaining standard listing
categories addressing open-ended investment companies (current LR 16A) and other non-equity categories (current LR 17-20) in the new UKLR. We proposed some minor consequential changes and category name changes to better describe the type of issuer or security a chapter and listing category applies to.
11.39 In relation to the current listing category for certificates representing certain securities
(LR 18), we proposed not to include certificates representing debt securities, to remove those provisions that relate to an issuer of debt securities, and to require the underlying shares to be listed. In addition, we proposed not to list depositary receipts which represent equity shares issued by UK-incorporated companies. For ease of reference when discussing this chapter in this section, we will refer to depositary receipts.
Table 4: Retained categories within the new UKLR structure
Existing category and LR chapter
New category name (where relevant) and new UKLR chapter Open-ended Investment Companies (LR 16A) Debt and Debt Like Securities (LR 17) Open-ended investment companies (UKLR 12) Debt and debt-like securities (UKLR 17) Certificates Representing Certain Securities (LR 18) Certificates representing certain securities (depositary receipts) (UKLR 15) Securitised Derivatives (LR 19) Securitised derivatives (UKLR 18) Miscellaneous Securities (LR 20) Warrants, options and other miscellaneous securities (UKLR 19) Summary of feedback and our response
11.40 In question 34 of CP23/31, we asked:

Question 34: Do you agree to our proposals for retaining the remaining standard listing categories and minor drafting amendments proposed? If not explain why.
11.41 We had approximately 10 responses to this question from a range of law firms, trade
associations, exchange operators, and issuers.
11.42 On the proposal to retain a category for depositary receipts, the majority of
respondents supported this and the proposal to exclude debt, and also to limit the scope of the category to depositary receipts representing shares in overseas companies only.
11.43 Two respondents made an argument for aligning or merging this category with the
secondary listing category, so that issuers of depositary receipts could benefit from a common rule set and benefit from the same proportionate requirements.
11.44 One respondent was of the view that the current ability to list depositary receipts in
the premium segment under LR 21, the sovereign controlled commercial companies category, should be retained and incorporated into the commercial companies category.
11.45 Two respondents raised queries regarding the proposed UKLR 15.2.8R (in tranche 2 of
the draft rules), which would require the underlying shares that the depositary receipts represent to be admitted to trading on an overseas regulated, regularly operating, recognised open market. One sought clarification, while the other objected to this proposed change in scope, arguing that it reduces flexibility and competitiveness as compared other jurisdictions and the current listing rules. Our response:
We have proceeded to retain the categories as proposed, with the new numbering and naming conventions as set out in CP23/31. Across these chapters, we have also sought to ensure consistent wording in relation to the drafting of the ‘shares in public hands’ provisions. This is to avoid potential confusion, rather than making a change to the proposed approach. In relation to UKLR 15, regarding depositary receipts, we have made minor amendments to clarify the final rules, including to ensure that the existing continuing obligation for depositary receipts to be listed on a regulated market is carried over to the UKLRs to maintain the status quo. We have confirmed the proposed UKLR 15.2.8R as consulted on, since it ensures consistency of the principle that is also applied to the secondary listing category in relation to the standards expected of overseas listings. It also supports the wider approach to the new listing structure by closing routes by which issuers may seek to avoid the consistent standards applied by the new listing regime. Therefore, from the implementation of the new regime, new issuers of depositary receipts will need to ensure the underlying shares are admitted to trading on an overseas regulated, regularly operating, recognised open market.

A transitional provision is in place to disapply this requirement indefinitely for existing issuers with depositary receipt listings mapped to UKLR 15, maintaining the status quo for these issuers (see Chapter 14). We have not combined UKLR 15 with the secondary listing category, as we consider it important to have tailored listing categories for different security types to support transparency and clarity. We do not intend for there to be any implied ‘quality’ differential inferred by different listing categories under our new UKLR sourcebook, but they do allow for clearer identification of specific instrument types.

Chapter 12
Changes impacting all listing categories – eligibility and ongoing
12.1 In this Chapter we describe the feedback we received on our proposals that would
impact all issuers of listed instruments and was not limited to specific categories. These included proposed new Listing Principles and changes to enhance existing provisions designed ensure co-operation and FCA access to the information and records of an issuer. The proposals were set out in Chapter 14 of CP23/31.
12.2 Our final rules that relate to these areas are included in UKLR 1, UKLR 2 and UKLR 21 in
Appendix 1.
Single set of Listing Principles and supporting guidance
12.3 We proposed having one set of Listing Principles to underpin a reformed listing regime,
by combining the current Listing Principles and Premium Listing Principles (current LR 7). The intention was to create a clear and consistent set of principles for all issuers, regardless of listing category and security type, that are easy for both issuers and investors to understand.
12.4 Our proposals included converting current Premium Listing Principles 3 and 4 to specific
requirements in rules applicable to issuers with equity shares listed in the commercial companies and closed-ended investment funds categories.
12.5 We also proposed additional guidance to support Listing Principles 1 and 2, to clarify
the role that the board of directors should play in relation to ensuring a listed company meets its regulatory obligations.
12.6 Finally, we proposed to require, as part of the application process, that an applicant’s
board provide confirmation that the applicant has appropriate systems and controls in place to ensure it can comply with its ongoing listing obligations and Listing Principles once admitted. A draft board confirmation form (entitled the ‘Procedures, Systems and Controls Confirmation form’) was published in PMB 48 for this purpose. We proposed that submission of the form would be a point in time confirmation. However, the obligation to comply with relevant continuing obligations, including the Listing Principles, would be ongoing. We also said that we may choose not to admit securities if an issuer was unable to provide the completed board confirmation form or where, in response to queries that we may raise in relation to it, we have concerns that the applicant has not satisfactorily demonstrated its readiness to comply with our rules. Summary of feedback and our response
12.7 In 35 to 38 and 40 of CP23/31 we asked:

Question 35: Do you agree that the current Premium Listing Principles 3 and 4 should be reframed as rules for the commercial companies category and the closed-ended investment funds category? If not, explain why. Question 36: Do you agree with our proposed single set of Listing Principles and supporting guidance, which would be applicable to all listing categories? If not, please explain why. Question 37: In relation to the proposed Listing Principles 5 and 6, are there any practical implications for issuers of debt securities that need to be considered? Question 38: Do you agree with our proposed guidance to support the Listing Principles, regarding the importance of the role of directors and on the arrangements for accessibility of information? If not, please explain what you disagree with and why. Question 40: Do you agree with our proposal to issue guidance to support Listing Principle 1, to clarify that adequate procedures, systems and controls includes the applicant or issuer being able to explain where information is held and how it can be accessed (regardless of whether the information is held in the UK or elsewhere), and that information should be easily accessible from the UK? If not, please explain why?
12.8 With regard to our proposals to reframe Premium Listing Principles 3 and 4, we received
over a dozen responses to this question, all of which were supportive.
12.9 We received around 20 responses to our proposed new single set of Listing Principles,
guidance and related proposals, including from law firms, trade associations, consultancy firms and issuers. The majority of these respondents were in agreement with our proposals.
12.10 A quarter of these thought the increased focus on directors in the proposed guidance
and the proposed board confirmation form could deter directors, including nonexecutive directors, from taking up these roles due to a perceived increase in director liability. We discuss this further below.
12.11 A similar number requested more guidance on the role and expectations of directors,
or clarification of the FCA’s expectations for compliance with Listing Principles 1 and 2 in practice. This included seeking clarification of what ‘reasonable steps’ means in the proposed new guidance, and the degree of granularity that maybe required when explaining to the FCA where different types of information is held and how it can be accessed. Some respondents noted that information will not always be held in written or electronic form.

12.12 A small number also provided drafting suggestions so that the proposed new rules and
guidance more closely mirrored the wording of the Listing Principles.
12.13 A couple also suggested requiring disclosure of the completed board confirmation form
to investors or building it into the prospectus disclosure requirements.
12.14 One respondent suggested that we include specific reference to the establishment of
procedures which provide a reasonable basis for the issuer to make proper judgements on an ongoing basis as to the financial position and prospects of the applicant and, where applicable, its group, to align with the sponsor declaration wording.
12.15 One respondent queried the intention of applying the single set of Listing Principles to
the transition category, given it is an increase in obligations and does not maintain the status quo for existing standard listed issuers. Our response:
Having considered the feedback received, we have proceeded to make the rules as consulted on with only minor amendments, as explained further below. Reflecting current Premium Listing Principles 3 and 4 in the UKLR as rules We have proceeded as consulted to reflect Premium Listing Principle 3 as a rule for commercial companies in UKLR 5.4 to require that an applicant must have in place a constitution which ensures that all equity shares in a class that has been admitted to the equity shares (commercial companies) category carry an equal number of votes on any shareholder vote. A corresponding continuing obligation can be found in UKLR 6.2. Similarly, to reflect Premium Listing Principle 4, we have confirmed as a rule in UKLR 5.4 that where the applicant has more than one class of equity shares admitted to the commercial companies category, the aggregate voting rights of the equity shares in each class should be broadly proportionate to the relative interests of those classes in the equity of the listed company. This is accompanied by guidance on factors that the FCA will have regard to in assessing whether the voting rights are proportionate for this purpose. Corresponding continuing obligations are in UKLR 6.2. We have applied a similar approach for closed-ended investment funds, with UKLR 11 cross-referring to the relevant provisions in UKLR 5.4 and UKLR 6.2. Listing Principles and guidance We have proceeded to finalise the UKLR Listing Principles and related guidance as consulted on with some minor changes to improve the consistency of language used. In particular, we have adjusted the guidance supporting Listing Principle 1 regarding the roles of directors to more closely mirror the language of the Listing Principle.

Our response to other points raised
We note the concerns raised about additional focus on directors and the perceived increase in liability that may result, and the concern that we are requiring something different of directors and boards of issuers in terms of their roles and responsibilities. The additional guidance provided in relation to Listing Principle 1 is not intended to alter the roles or responsibilities of directors or boards or to indicate a shift in our supervisory or enforcement approach. The new guidance supporting the Listing Principles is intended to assist listed companies and their boards comply with the Listing Principles. We acknowledge the requests that have been made in the feedback to CP23/31 for more guidance, particularly of a practical nature. In order not to delay finalising the wider package of reforms, we have not sought to address this at this stage. However, we will consider further, post implementation, whether it may be beneficial to provide additional clarification and if so in what form. We have noted where respondents have suggested additional content for inclusion on the Listing Principles supporting guidance or additional disclosure requirements relating to the board confirmation form but, again, have not sought to address these at this stage. We acknowledge that some of these changes impose additional requirements on existing issuers in standard listing. However, Listing Principles 1 and 2 already apply to all listed companies, and feedback has not suggested that the remaining principles would be unduly burdensome on standard listed issuers. Our tailored rules for the transition category do otherwise maintain the status quo for such issuers. Board confirmation
12.16 In question 39 of CP23/31 we asked:
Question 39: Do you agree with our proposed board confirmation that the applicant has appropriate systems and controls in place to ensure it can comply with its ongoing listing obligations and Listing Principles once admitted? If not, please explain what you disagree with and why.
12.17 Just under half of the 20 respondents to this question and the questions discussed at
paragraph 12.7 above, raised concerns about the role of directors in relation to Listing Principles and the proposed board confirmation form. Comments included:

The declaration should be provided by the applicant rather than the board, given
the Listing Principles apply to issuers.
The declaration would be overly burdensome if it required an issuer to submit it
each time it admits securities to the list ie, subsequent to an initial admission to listing.
The requirement for an applicant to provide confirmation for the board goes
beyond what is required in Listing Principle 1, and also beyond the sponsor obligation, as it is not based on taking ‘reasonable steps’. Whereas Listing Principle 1 and the sponsor obligation require taking ‘reasonable steps’ or to come to a ‘reasonable opinion’ respectively.
It would require boards that provide strategic leadership and high-level oversight to
carry out closer supervisory-type activities, which are typically delegated.
Directors could be exposed to legal liability, for example, by unintentionally
giving an inaccurate declaration. Some viewed that if the board believes that the applicant’s procedures, systems and controls are adequate at admission, but in fact they are not, the FCA could potentially bring a civil claim against the directors.
It is unclear how an applicant is expected to demonstrate its readiness to comply
with its obligations, over and above the board confirmation and any sponsor declaration required.
The board confirmation may put the UK at a disadvantage compared to other
jurisdictions.
12.18 Feedback to the draft board confirmation form published in PMB 48 from c.6
respondents repeated some of the above points, but also included the following:
Queries about the scope of application of the form, for example, to issuers
transferring listing category or for different security types such as debt.
Observations that the form asks for confirmation in relation to the proposed
guidance provisions supporting Listing Principles 1 and 2, yet guidance is not binding and need not be followed to achieve compliance.
That the form is broader than the requirement in UKLR 20.3.1R for an applicant to
provide the board confirmation, in that it is not limited to Listing Principle 1, and also covers Listing Principles 2 and 3.
The FCA should consider if updates to the Decision Procedure and Penalties
Manual are required.
Some drafting suggestions were also put forward.
Our response:
We have proceeded to finalise this requirement and the related form, but with modifications to address some of the feedback received. We have finalised the requirement for applicants to provide a completed confirmation form from the board, modified to more closely reflect the wording of Listing Principle 1 ie, to confirm that the applicant has taken reasonable steps to establish adequate procedures, systems and controls. While the form is required to be signed by a duly authorised member of the applicant’s board, the form has been modified to reflect that the obligations referred to in it are those of the applicant. We have also adjusted the final wording of the requirement to provide the confirmation to clarify that the completed confirmation needs to be provided by an applicant that is making an application for admission of securities for the first time. It is not required on subsequent applications for admission of securities of the same class as securities already listed

or in the case of a subsequent application for admission of a new class of security. It is intended to be for new issuers only, rather than those with existing listed securities. Therefore, it does not apply to existing issuers, or to issuers that may transfer to a new category. We have made changes to the form, in response to feedback received, to ensure that the scope and application of the form is clear, to more clearly reflect the confirmation required in UKLR 20.3.1R, and position the wording of the form closer to the text of Listing Principle 1 and related guidance. We have also made consequential changes to reflect the modified text discussed above, as set out in our response box below paragraph 12.15. While we have retained this as a board (rather than an applicant) confirmation, we consider that the changes we have made, alongside our wider responses in this section, should address most of the concerns expressed in feedback. Please see Appendix 3 for the final form, which will be available on our website from the in-force date of the new rules, so 29 July 2024. Contact details for key persons and for service of documents Our proposals
12.19 In CP23/31 we proposed that all applicants and issuers must notify us of contact details
of key senior individuals within the issuer, and to keep that information up to date. The purpose of the proposed requirement was to ensure that we can contact a senior person should we need to do so regarding matters of importance, or where we require an urgent response. Based on feedback to CP23/10, we proposed that applicants and issuers provide us with details of at least 2 executive directors or the equivalent.
12.20 We also clarified that the proposed key persons contact details would be required in
addition the contact details required for some issuers currently (under LR 9.2.11R and LR 14.3.8R) which we proposed to be carried forward for equity shares categories and the non-equity and non-voting equity shares category. These existing provisions serve a different purpose, as they require contact details of appropriate persons that can act as a first point of contact for the FCA. We proposed a minor change to the rules to ensure these requirements were also applicable to applicants.
12.21 We also proposed a requirement for all applicants and issuers to provide contact details
of a nominated person for the purposes of receiving service of relevant documents. Summary of feedback and our response
12.22 In questions 41 to 42 of CP23/31 we asked:

Question 41: Do you agree with our detailed proposals for all applicants and issuers to notify the FCA, and keep up to date, the contact details of 2 executive directors? If not, please explain what you disagree with and why. Question 42: Do you agree with our detailed proposals for all applicants and issuers to provide the FCA, and to keep up to date, a nominated contact and address for service of relevant documents? If not, please explain what you disagree with and why.
12.23 Around 15 respondents commented on the key person contact proposals. All
broadly agreed with the provisions, but some asked for additional clarification. Some respondents thought that limiting the proposals to 2 executive directors or equivalent would be too restrictive, and more flexibility may be needed. Other comments included requests for clarification regarding the scope and application of the various types of existing and proposed contact detail requirements to different issuer types, what we meant by executive director ‘or equivalent’, and what should an issuer do if they only have 1 executive director.
12.24 It was also noted in feedback that closed-ended investment funds, and possibly smaller
SPACs, may only have non-executive directors, and open-ended investment companies may only have one director which is an authorised corporate director rather than an individual. In particular, it was suggested that the inclusion of the company secretary in the case of investment funds would be helpful. Our response:
We have proceeded to make final rules in relation to contact details as consulted on, with additional clarification to respond to feedback. On the subject of key persons contact details, our intention is to have 2 contact details of senior management that would be able to act and assist the FCA in the event we needed to contact the issuer on an urgent matter. We have maintained our position as set out in CP23/31, in response to CP23/10 feedback, and have avoided specifying specific roles for certain issuer types, as we want the decision to sit with each individual issuer. However, we have modified the final rule so that it requires the contact details of at least 2 executive directors or, if an issuer does not have those, at least 2 directors. The final rule also states that where an issuer only has 1 executive director or has only 1 director, then they need only provide the contact details of that person. We have also clarified that the key persons contacts will be expected to be key persons who are able to assist the FCA regarding matters that require an urgent response. We would also clarify that we are not seeking to prescribe or infer a specific role or responsibilities on to the individuals nominated as a key person contact.

We will collect 3 types of contact details under the final rules:

first point of contact details for certain applicants and issuers which we
have carried over from the LRs
key persons contact details, which all applicants and issuers will be
required to provide, and
a nominated person for service of notices (for receiving service of
relevant documents), which all applicants and issuers will be required to provide We have updated UKLR 20 reflect that applications for debt and other securities also need to submit key persons contact details and details of a nominated person for service of notices, as well as applications for equity shares, for completeness. The updated contact details form is included in Appendix 3, which will be available on our website from 29 July 2024.

Chapter 13
Suspensions, cancellations and transfers
13.1 In this Chapter we describe the feedback we received on our proposed changes to
current LR 5, which includes rules and guidance on suspending, cancelling, and restoring listing and transfers, for all securities, presented in Chapter 15 of CP23/31.
13.2 Our final rules are in UKLR 21 in Appendix 1.
Our proposals
13.3 In summary, we proposed to:

Largely carry over the suspension, cancellation and transfer provisions in the
current Listing Rules, with some provisions relocated to the relevant tailored listing category chapters.
Make changes to language currently in LR 5.6.19G regarding our approach to
cancellation of listing, to make it clearer that when an issuer completes a reverse takeover or initial transaction, the FCA will seek to cancel the listing of an issuer’s equity shares or certificates representing equity securities, unless the FCA is satisfied that circumstances exist such that cancellation is not required.
Introduce a new requirement for all issuers to contact the FCA immediately prior
to any of its securities having been suspended for more than 6 months to discuss whether a cancellation of listing is appropriate or whether the securities can remain suspended for a further period to be agreed with the FCA.
Retain the current approach to transfers between listing categories set out in LR
5.4A, except for modified transfers (see Chapter 14). We have also updated the transfer provisions to reflect the proposed new listing categories. Summary of feedback and our response
13.4 In question 43 of CP23/31 we asked:
Question 43: Do you agree with the proposed approach for the permitted transfers between the new UKLR categories? If not, please explain why.
13.5 We received 10 responses to this question, and there was general support for our
proposals.

Our response:
We have proceeded to finalise the approach as proposed in CP23/31 for transfers, cancellations and suspensions, which as noted above can be found in UKLR 21.

Chapter 14
Implementation and transition arrangements
14.1 In this Chapter we describe the feedback we received on our proposals presented in
Chapter 16 of CP23/31 on our approach to implementation and transition, and our
response. While our proposals for a new transition category also form an important part in our transitional approach, the feedback to those proposals and our final response are covered in Chapter 11 of this Policy Statement.
14.2 Our final transitional provisions are in Appendix 1.
Proposed 2-week implementation period and approach for inflight listing applications and transfers
14.3 We said our intention was to publish our final rules in summer 2024, with a proposed
period of 2 weeks before the rules come into force, to allow premium listed issuers to benefit quickly from the changes the reforms would bring. All new listing submissions for eligibility review received on or after the implementation date would be required to be submitted in accordance with the new UKLR process and requirements.
14.4 We proposed to define an ‘in-flight’ listing application as a complete submission for an
eligibility review received by 4:00pm on the date the Policy Statement is published. Inflight applications would be treated, at the point the UKLR comes into force, as being an application for the corresponding new UKLR listing category as shown in Table 7 of CP23/31. PMB 48 subsequently provided information on the timing and notification to issuers of their expected new listing category.
14.5 We also proposed in-flight applications that correspond to either the transition
category, the shell companies category or the secondary listings category have 1 year to complete the admission process from the date of implementation of the UKLR, after which time the application would lapse. We said we intended to treat any in-flight transfers between categories in the same way as in-flight applications.
14.6 All existing issuers and in-flight applicants would have 6 months to prepare and put
in place appropriate systems and controls to comply with the proposals impacting all issuers (discussed in Chapter 12). Summary of feedback and our response
14.7 In questions 44, 46 (see also paragraph 14.21), 47, 49 and 50 of CP23/31 we asked:
Question 44: Do you agree with our proposed approach for dealing with inflight transfers between listing categories at the time the UKLR is implemented? If not, please explain why.

Question 46: Do you agree with our proposed transitional arrangements and specific transitional provisions for ‘mapped’ existing issuers and conversion of ‘in-flight’ applications at the time the UKLR is implemented? If not, please explain why. Question 47: Do you agree with our proposed transitional provisions to allow existing issuers and ‘in-flight’ applicants sufficient time to prepare for implementation of the proposed provisions that would impact all issuers? Question 49: Is the proposed period of 2 weeks between publication of the final UKLR instrument and those UKLR coming into force reasonable, assuming we proceed broadly as proposed? Question 50: Are there wider practical issues or impacts for market participants from the proposed implementation timing that we should consider?
14.8 Approximately 20 respondents provided comments on the transitional provisions,
including law firms, trade associations, consultancy firms, exchanges and issuers. Around half of these expressed broad agreement with the proposed transitional arrangements overall. However, there were also concerns expressed in certain areas. There were also strong calls from investor groups and other buyside stakeholders to generally pause our proposals where they strongly objected to them, as discussed earlier in this policy statement.
14.9 Over half were concerned that a 2-week gap between the Policy Statement and the final
rules coming into force would not be sufficient time to allow the market to get ready. Advisors on our listing requirements were particularly concerned about having sufficient time to adapt and advise their clients, especially those clients who were in the middle of a transaction such as a significant transaction. Alternative time periods suggested were between 4 to 8 weeks, with one suggesting 3 months.
14.10 A small number also queried how a 2-week implementation gap would work in practice if
the rules as consulted on changed.
14.11 In relation to in-flight applicants, around half a dozen were concerned about the proposal
to have a 4pm cut off on the day of the Policy Statement and argued for more notice to help applicants make plans. Given the date of publication of the Policy Statement would not be known in advance, there was concern that about the uncertainty this could cause for some prospective issuers.
14.12 Alternative approaches suggested included pushing back the cut off period by a short
period (eg, 48 hours after publication of the Policy Statement), making the publication date of the Policy Statement known in advance, or having a longer gap between publication and implementation of the final rules.

14.13 A couple of respondents raised points about the 6-month transitional period to adjust to
the proposed new rules that would apply to all issuers, asking if there would be scope for some flexibility if an issuer was working toward compliance. Another felt smaller issuers would need 3 years.
14.14 We received a small number of responses to question 50, most of which re-iterated
concerns about the 2-week period ahead of implementation being insufficient time to allow market participants to prepare. Some also queried the impact on index providers. Our response:
We have considered the feedback received and have proceeded to finalise the implementation arrangements in line with the timeframes and approach consulted on in CP23/31. We understand the concerns raised. However, given the final rules largely reflect the proposals as consulted on and the transitional provisions are in place, which allow time for issuers to adjust their systems and controls as needed where new requirements are being imposed, on balance we consider it appropriate to proceed as planned. This will enable the benefits of the reforms to be realised as soon as possible. In summary:

Our final rules come into to force on 29 July 2024.
In-flight applications are completed submissions to the FCA for an
eligibility review by an applicant for admission of securities received by 4:00 pm on the date on which the UK Listing Rules Instrument is published (ie as part of this Policy Statement in Appendix 1), where the securities have not been admitted to listing prior to 29 July 2024.
Incomplete submissions by 4:00 pm on the date on which the UK Listing
Rules Instrument is published will not be treated as in-flight applications and will either be considered under eligibility requirements for a new UKLR category (excluding the transition category) or lapse.
Any new submissions after 4:00 pm on the date on which the UK Listing
Rules Instrument is published will need to be submitted according to the proposed new UKLR requirements.
In-flight applications to standard listing that correspond to either the
transition category, the shell companies category or the secondary listings category will have a period of 1 year from 29 July 2024 to complete the admission process, after which time the application would lapse. The application would also lapse if there were a material change to the applicant’s overall business proposition during the transitional period.
All existing issuers and in-flight applicants will have 6 months to put in
place appropriate systems and controls to comply with the changes confirmed in Chapter 12 that impact all issuers. As explained in Chapter 1, the new and amended forms, checklists, and sponsor declarations will be available on our website from 29 July to align with the new UKLRs. However, during the 2-week period between

publication of this Policy Statement and the UKLRs coming into force, submissions will still be permitted. To support issuers and the advisory community, we will seek to engage with key advisors (particularly law firms and sponsors) on our listing requirements to explain our new rules. This is intended to help them get up to speed quickly and advise their clients. Please see our separate response below paragraph 14.27 for our response in relation to mid-flight transactions. Post implementation transfer of issuers from the transition or secondary listing categories
14.15 We proposed that post implementation, certain existing issuers and in-flight applicants
that later transfer to the commercial companies category would be able to do so using a modified transfer process. The modified process would include an eligibility assessment focused on additional requirements only ie, they would not be reassessed against any eligibility criteria that may apply that they had previously demonstrated that they had met at the original point of admission to listing. The modified process would require the appointment of a sponsor to undertake a targeted sponsor service, given the focus on additional obligations only. However, a sponsor would have an obligation to confirm that it has not identified any adverse information that would lead it to conclude the issuer would not be able comply with the commercial companies category listing requirements.
14.16 If an issuer mapped to the transition category becomes eligible to transfer to either the
shell company category or the secondary listing category that issuer could, if it wished, apply to transfer to either of those categories and the modified transfer process would also be applied if the issuer meets the criteria. Summary of feedback and our response
14.17 In question 45 of CP23/31 we asked:
Question 45: Do you agreed with our proposed modified transfer process for standard listed issuers automatically transferred into the transition category or secondary listing category that may wish to transfer to the commercial companies category (or the shell companies category or the secondary listing category) post implementation?
14.18 There was broad support among respondents for this approach, but a couple did
raise queries. One respondent asked for clarity regarding the treatment of the minimum market capitalisation eligibility criterion. Another said more guidance was needed regarding the obligation on sponsors to confirm if they had identified adverse information as part of the modified transfer process.

Our response:
Given the broad support for our proposed modified transfer process we have proceeded to finalise the approach as consulted on in Chapter 16 of CP23/31. Since the minimum market capitalisation requirement is an existing eligibility criterion applicable to all issuers, it would not be re-assessed as
part of the modified transfer process. This applies even if an issuer had
securities admitted to listing before the increase in the minimum market capitalisation requirement in December 2021. We also consulted on a Technical Note: Sponsor’s confirmation in relation to modified transfer of listing category, in PMB 48. This included an explanation of our expectations of sponsors in relation to the obligation to provide the confirmation that no adverse information has been identified. Importantly, we said that we expect the sponsor to consider its obligation within the context of the targeted work undertaken as part of the modified transfer process and that we would not expect a sponsor to undertake a broader assessment of the issuer’s procedures, systems or controls. Instead, the sponsor may make a rebuttable presumption that an issuer that has already been subject to and complying with relevant UKLR (and previously LR), DTR and MAR obligations by virtue of its existing listing, and has appropriate systems and controls in place, unless information arises during the course of its work to indicate otherwise. The basis of the confirmation is therefore that no evidence to the contrary has been identified in the course of the sponsor’s work. The Technical Note will be finalised in due course. Transitional provisions for specific listing categories
14.19 We proposed that existing issuers and in-flight applications mapped to the shell
companies category would have a transitional period of 3 years to allow time for them to either complete their operations or make the necessary changes to comply with the proposed additional requirements.
14.20 In addition, in the second tranche of our draft rules published in March, we proposed 2
further category specific transitional provisions, designed to maintain the status quo and disapply certain new criteria for existing issuers and in-flight applications mapped to the relevant category below that could not be addressed retrospectively:

Secondary listing category: we proposed to disapply the requirement regarding the
location of central management and control and sub-paragraphs (1) and (2) of the definition of a qualifying home listing for existing issuers and in-flight applicants.
Certificates representing certain securities (depositary receipts): for existing
issuers, we proposed to disapply the requirement for the underlying shares that the certificates represent to be listed on an overseas regulated, regularly operating, recognised open market.

Summary of feedback and our response
14.21 In question 46 of CP23/31 we asked:
Question 46: Do you agree with our proposed transitional arrangements and specific transitional provisions for ‘mapped’ existing issuers and conversion of ‘in-flight’ applications at the time the UKLR is implemented? If not, please explain why.
14.22 Aside from feedback already summarised above (from paragraph 14.7), a few
respondents suggested a longer transition period, such as 5 years, would be needed to allow shells to adjust to the new requirement. Our response:
We have proceeded to make the category-specific transitional provisions as consulted on, with the exception of those relating to the shell companies category, where we have made changes to reflect the changes in the final policy position of that category. The final rules for the shell companies category mean that there is less need for detailed transitional provisions, as more of the status quo is being maintained. Where a transitional period is needed, the intention is to provide existing issuers and in-flight applicants with sufficient time to adjust. Therefore, we have updated the transitional provisions relating to existing issuers and in-flight applicants for listing in the shell companies category to allow an overall period of 6.5 years from the date of implementation of the final rules during which they must complete an initial transaction. This consists of a change to the proposed 3-year transition period for the shell companies category to a 1-year period, to enable existing issuers and in-flight applicant 1-year to complete their operations from the date of implementation, 29 July 2024. If by the end of that period (ie, 29 July 2025) they have not completed an initial transaction, the UKLR 13 rules will apply, which require completion of operations within 24 months, extendable with shareholder permission for a further 3 years (consisting of 3 x 12-month periods, with shareholder approval to extend for each 12-month period). A 6-month extension is also permitted in certain limited circumstances without the need for a shareholder vote, to allow for a transaction to be completed. We consider this should provide sufficient time and in practice provides an additional year as compared to our proposals in CP23/31. During the 1-year transitional period discussed above, existing issuers or in-flight applicants that meet the current LR 5.6.18AG conditions under the LR sourcebook (in order to avoid the presumption of suspension) and satisfy the existing LR 5.6.18CR, LR 5.6.18DR, LR 5.6.18ER and LR 5.6.18FR during the time required under the LR sourcebook, the FCA will generally be satisfied that the shell company has sufficient measures in place to protect investors and so that the smooth operation of the market is not temporarily jeopardised such that a suspension is not

required under UKLR 13.4 and the relevant confirmation under UKLR
13.4 will not be required. The policy intent is that those issuers or inflight applicants that have already made arrangements to comply with
the transaction time periods under the current LR 5.6.18AG and have agreed specific transaction time periods with their investors, cannot use the transitional provision to extend what they have agreed with investors under the current rules and guidance. The 1-year transition period means that existing issuers and in-flight applicants will become subject to the sponsor regime after 1 year, and not 3 years as consulted on. However, the circumstances when a sponsor will need to be appointed are less than originally proposed, given the final tailored rules for this category largely maintain the status quo for shell companies, as explained in Chapter 11. Issuers in the shell companies category relying on the transitional period would be identifiable by a list on the FCA website. Impacts on ‘mid-flight’ transactions undertaken by existing premium listed issuers and related sponsor role, and approach to transitional provisions
14.23 We proposed to apply the new UKLR transaction requirements (replacing premium
listing requirements) and rules for related sponsor services with immediate effect on the implementation day when the new UKLR come into force.
14.24 We explained how this would impact a transaction that was already underway (having been
commenced while the issuer was premium listed) and the related sponsor service (where the sponsor had been appointed under premium listing requirements). Essentially that we would not continue to apply premium listing requirements to the transaction, including in relation to the sponsor service, where they had not been carried forward into UKLR.
14.25 We also published our transitional provisions for mid-flight transactions in TP 6 set
out in our tranche 2 instrument. These were intended to assist issuers by clarifying how to apply the new rules to transactions commenced when the issuer was subject to the premium listing rules, explain how to approach the aggregation requirements in relation to earlier transactions, bridge possible information gaps, remove unintended consequences, and be proportionate. Summary of responses and our feedback
14.26 In Q48, CP23/31 we asked:
Question 48: Do you agree with these impacts at implementation day and our approach to transitional arrangements for post IPO midflight transactions (when commenced I premium listing) and related sponsor services?

14.27 Given the technical nature of this area, the responses came as expected from the
advisory community. They were supportive. However, as noted above, there were concerns about the proposed 2-week implementation period in this context and we plan to engage with them to support their understanding of the changes. Our response:
We have finalised TP 6 broadly as consulted. We have made some consequential changes to the notification requirements for a significant transaction. Firstly, we have amended to reflect the broader changes to the enhanced disclosures requirements in UKLR 7. Secondly, we permit an issuer to make a ‘top up’ notification in circumstances where it has previously notified a class 1 transaction under premium listing requirements but not sent an FCA-approved class 1 circular before implementation date.

Chapter 15
Role of sponsors in the new UK Listing regime
15.1 In this Chapter we describe the feedback we received on our proposals on the role
of sponsors in the UK Listing regime as presented in Chapter 17 of CP23/31 and our response. Our final rules are in UKLR 24 in Appendix 1. Proposed sponsor role under the proposed reforms
15.2 We explained in CP23/31 that within the context of the wider proposals the role of
the sponsor at the listing gateway would remain largely unchanged. Where existing eligibility criteria under the premium listing segment would no longer apply, we explained that a sponsor’s due diligence would not be required to continue to assess against the removed criteria. However, sponsors would need to consider as part of their due diligence the new requirements and systems and controls that issuers would need to have in place to be able to comply with the new proposed obligations that would apply.
15.3 We proposed minor clarifications to the principles for sponsors. This included clarifying
that a sponsor must, in relation to a sponsor service, act with honesty and integrity in their relations with the FCA and more broadly in relation to the undertaking of a sponsor service.
15.4 We explained that we would consult on detailed guidance to clarify our supervisory
approach and expectations of sponsors through revisions to the Technical Notes, and to continue our engagement with sponsor firms. In this regard, CP23/31 discussed the sponsor declaration, use of third party experts and record keeping specifically. Further to this, we published PMB 48 in April 2024, in which we explained we were considering the feedback we had received more broadly on the sponsor regime, in our consultations and ongoing engagement, and consulted on changes to proposed guidance in our Knowledge Base in relation to the listing regime, including in relation to sponsors. Summary of feedback and our response
15.5 In questions 51, 53, and 54 of CP23/31, we asked:
Question 51: Do you agree with our proposed approach and clarification around sponsors’ role at the listings gateway for the relevant categories? Question 53: Do you agree with our proposals to clarify the role of sponsors under the UKLR?

Question 54: Do you agree with our proposed modifications to the principles for sponsors? If not, please explain why.
15.6 In general, we received c.20 responses to our questions on the role of sponsors in the
proposed reforms, from a range of trade associations, law firms, consultancy firms, sponsors and exchanges. Most were in broad agreement with our proposals, but around half raised specific comments or concerns.
15.7 A small number felt the sponsor regime could impact the competitiveness of the UK
compared to other jurisdictions which do not have a sponsor regime or equivalent. As noted in Chapter 13, there was also a small number that objected to the application of the sponsor regime to the shell companies category on proportionality grounds.
15.8 Some made comments that mirrored previous feedback to CP23/10, noting that there is
a degree of overlap between the work required to fulfil a sponsor service and investment banking services more generally. This caused them to question the benefits of the sponsor regime.
15.9 Around 6 specifically welcomed the intention to provide more guidance for sponsors.
This included in relation to record keeping and the FCA’s expectations of sponsor due diligence of an applicant’s systems and controls which was seen by a couple of respondents as an extension to a sponsor’s current role.
15.10 There was interest to see the updated sponsor declarations in advance of
implementation of the proposed reforms.
15.11 With regard to the proposed modifications to the principles for sponsors, while there
was broad support for a standalone principle to act with honesty and integrity, one respondent said that some of its members thought this approach might risk creating additional complexity given the overriding duty owed by a sponsor to the FCA.
15.12 We have also received feedback to the sponsor related Technical Notes that were
consulted on as part of PMB 48.
Our response:
We continue to value the important role of sponsors, as previously set out in CP23/31, CP23/10 and, before that, DP22/2. Therefore, we have proceeded to finalise the rules as consulted on in relation to the application of the sponsor regime to the following categories:

Commercial companies category
Closed-ended investment funds category
Shell companies category
Some changes have been made to the proposed rules regarding the circumstances that would require a sponsor to be appointed once admitted to listing. These are consequential in nature and reflect the final rules for each of the above listing categories. These details are discussed

in the chapters dealing with these categories. We have also made minor changes to the draft rules, to simplify drafting in places. We have also made a change to the existing guidance in relation to record keeping to seek to ensure a proportionate approach is taken. We have acknowledged in the guidance that records should be sufficient to enable a person with general knowledge of the sponsor regime and basic understanding of a transactions to which a sponsor service relates to understand and verify the basis on which material judgements have been made. This reflects feedback received to our consultations, including to PMB 48, and from our wider engagement with sponsors. The related Technical Note on sponsor record keeping, which includes a practical Q&A section, is being consulted on in PMB 50. In addition, PMB 50 also consults on updated Technical Notes in relation to supervisory reviews of sponsor firms and the FCA’s expectations of a sponsor in relation to specialist due diligence. We have published draft sponsor declaration forms in Appendix 3 of this Policy Statement. The main changes are to address the changes made to the related UKLR provisions. We have also addressed feedback received during our engagement with sponsors, that some sponsor employees feel uncomfortable signing declarations on behalf of the sponsor. We have addressed this by amending the declarations so that they are signed by the sponsor firm. These forms will be available on our website from 29 July 2024, when the final rules come into force. We have also made consequential changes to the final UKLR Chapter 24, to reflect the final changes made to LR 8 regarding sponsor competence requirements, which came into effect from 26 April 2024 via Handbook Notice 118. At the same time, we confirmed the final technical note changes in relation to sponsor competence rules in LR8 via Primary Market Bulletin 48. Sponsor role post IPO – commercial companies category
15.13 As discussed in CP23/31 (and elsewhere in this policy statement) we proposed a
narrower set of circumstances, compared with premium listing, where it would be mandatory for an issuer to appoint a sponsor. We explained however that we saw sponsors continuing to play an important role.
15.14 We noted that where the FCA is required to grant a listing application for a further issue
of shares in the commercial companies category, or approve a circular or prospectus, we intended to continue to seek the range of sponsor confirmations that we currently require in premium listing, and for certain other matters connected with a reverse takeover. In the existing LRs, the sponsor declarations reflect matters set out in LR 8.4. The corresponding provisions (to the extent we proposed to carry them over into UKLR)

were set out in draft UKLR 24.3 (Role of a sponsor: transactions) included in Appendix 2 of CP23/31 and the full draft rules subsequently published in March 2024.
15.15 For this purpose, we would amend our existing ‘sponsor declarations’ and other forms
(available on our website) to remain aligned with the final requirements of the UKLR.
15.16 We also noted that we would be interested in any further views from stakeholders
and whether and how our approach to sponsors could be more proportionate in the commercial companies category. Summary of feedback and our response
15.17 In question 52 of CP23/31, we asked:
Question 52: Do you agree with our approach to the retained sponsor confirmations to the FCA on post-IPO transactions? If not, please explain your preferred alternative approach and the reasons for it.
15.18 We received 10 responses from a range of advisors to listed companies and their trade
bodies, panels advising the FCA, two trade bodies advising investors and an exchange. Eight of the respondents agreed (although 4 from the advisory community caveated their responses pending sight and review of the form of the confirmations).
15.19 A trade body representing investors disagreed because it did not support our approach to
the sponsor role more broadly on significant transactions and related party transactions (which we discuss in Chapters 5 and 7 above). A reporting accountant also supported the retention of the sponsor role but not the requirements to provide the confirmations. Our response:
We have finalised the range of sponsor confirmations in line with the approach we consulted on. That is the same as premium listing in so far as the range of matters on which we seek sponsor confirmations (set out in the sponsor declarations) correspond with the obligations on sponsors set out in our rules. These are set out in UKLR 24.3. The corresponding declarations will be available on our website for use from implementation day and for reference we have included them in
Appendix 3 of this policy statement.

Chapter 16
Consequential Handbook changes
16.1 In this Chapter we provide an update on our proposals presented in Chapter 19 of
CP23/31 on the consequential Handbook changes needed as a result of our proposed reforms. Consequential changes to other sourcebooks Our proposals
16.2 In summary, we proposed changes to the following modules of the Handbook where
certain references or phrases relating to the listing rules would change if our proposals were implemented:

Fees Manual
Decision Procedure and Penalties Manual
Disclosure Guidance and Transparency Rules
Code of Conduct
Statements of Principle and Code of Practice for Approved Persons
Conduct of Business
Environmental, Social and Governance
The Enforcement Guide
Glossary of definitions
Summary of feedback and our response
16.3 We did not receive any comments in relation to these proposals.
Our response:
We have proceeded to make the changes broadly as consulted on, subject to some minor clarifications and adjustments which reflect substantive changes to the final UK Listing Rules.

Chapter 17
Cost benefit analysis
17.1 In CP 23/31, we set out our cost benefit analysis (CBA) of our consultation proposals.
This Chapter summarises the CBA in Annex 2 of CP 23/31, the feedback we received on this CBA and how we have considered it in our CBA. Summary of the CBA
17.2 In our CBA, we identified regulatory failures were creating harm issuers and investors
in companies through unnecessary costs for issuers and barriers to listing and capital raising. This is in the context of evidence of a continued decline in UK listings, as described on pages 147 to 150 of the CBA. We consider that these excess costs and other burdens imposed by our regulation are acting against companies listing (or remaining listed). For example, additional costs for issuers to raise capital, higher regulatory costs for issuers than our proposed regulation, or a reduced number of issuers for investors to invest in if the existing regulation contributes to a continuing decline in the numbers of IPOs and of companies listed in the UK.
17.3 As described in the causal chains on pages 157 to 159 of our CBA, we expect our
proposed reforms to our listing rules would reduce actual or perceived regulatory barriers or costs to companies, while continuing to give investors the information they need to make informed decisions.
17.4 We estimated that the illustrative costs and benefits of our proposals for year 1 could be
summarised as in Table 1, based on the average number of firms that would have been affected by each proposal in recent years. Since the number of future transactions in each category is uncertain, these illustrative totals should not be used to extrapolate the quantifiable costs and benefits for future years.
Table 5: Illustrative costs and benefits of our proposals in CP 23/31 (£m)
Cost/benefit Eligibility
Significant transaction
Related party transaction
Sponsor changes
Other CP content Total
One off familiarisation and legal costs
(for all firms)
(1.1) (2.0) (1.9) (1.4) (17.9) (24.3)
Total costs (1.1) (2.0) (1.9) (1.4) (17.9) (24.2) Saved accounting costs on eligibility
2.9 n/a 2.9

Cost/benefit Eligibility
Significant transaction
Related party transaction
Sponsor changes
Other CP content Total
Saved accounting costs on significant transactions n/a 15 – 30 n/a 15 – Saved costs on related party transactions n/a n/a 2 – 4 n/a n/a 2 – 4 Assumed ‘premium’ for UK listed issuers engaged in mergers (required for breakeven analysis) n/a 4.39 n/a Total benefits 2.9 19.4. – 34.4. 2.0 – 4.0 n/a n/a 24.3 – 41.3 Total net benefits year 1
1.8 17.4-32.4 0.1-2.1 (1.4) (17.9) 0.0-
17.0
17.5 Aside from these quantifiable costs and benefits, we also recognised there are
additional non-quantifiable costs and benefits. A more detailed description of which is given in the summary of costs and benefits section on pages 165 to 168 of the CBA.
17.6 We used a breakeven analysis to assess whether our proposals are likely to be net
beneficial. Based on the illustrative estimates for costs and benefits in table 1 above, our proposal implies one-off costs of £24.3m and benefits net of the merger premium of £19.9m (lower bound). Given this, a saved merger premium of only £4.39m would imply that the proposals break even. This figure of £4.39m is significantly lower than the estimated average merger premium of up to £24.1m per transaction. This difference is even more pronounced given that UK-listed firms were involved in c.50 M&A transactions per year between 2018 and H1 2023.
17.7 Our CBA concluded that based on the available information, the quantifiable benefits
from our proposals, in particular the advantages in mergers and acquisitions, are likely to outweigh the quantifiable costs in the first year of our proposals. This is because the actual avoided merger premium is much larger than the breakeven figure of £4.39m used above. Further, the familiarisation costs are one-off costs, but the benefits, such as the saved merger premium, will continue to accumulate beyond year 1. Given these ongoing benefits, we consider that the proposals are likely to be net beneficial even when the unquantifiable impacts are taken into account.

Developments in the UK listed market since the CBA
17.8 Following publication of CP23/31, the UK listed market has continued to face challenges,
with the number of UK-listed issuers declining from around 1,124 in March 2023 to around 1,059 by March 2024 based on data from the official list.1
17.9 We have continued to see a relatively subdued UK IPO market with 3 IPOs on the London
Stock Exchange raising £283.8m.2
Feedback to CP 23/31
17.10 We asked the following questions in relation to the CBA in CP 23/31.
Question 56: Do you agree with our assumptions and findings as set out in this CBA on the relative costs and benefits of the proposals contained in this consultation paper? Please give your reasons. Question 57: Do you hold any information or data that would allow assessing the costs and benefits considered (or those not considered) here? If so, please provide them to us. Question 58: Do you agree with our conclusion that the proposals don’t significantly reduce the investment in UK listed companies compared to current levels, but might increase investment if a larger number of companies list in the UK? We welcome comment, in particular, if supported with evidence on the likely impact on investment levels.
17.11 We had 8 responses in relation to the CBA of which we summarise the key points from
below. Of these, 6 responses from investors challenged the CBA analysis and findings, 1 response from the Investment Association was mixed in its views and 1 response from the Shareholders Society supported the CBA. We summarise the feedback by its theme below and respond to each theme in “Our response” further down. Engagement costs to investors
17.12 Some institutional investors provided estimates of the additional engagement costs
which leading investors may bear due to our proposals in relation to shareholder voting (on significant and related party transactions) and dual class share structured companies. They estimated additional due diligence costs for investors of £10k per significant transaction, between £10-24k per related party transaction, and £9k per year in relation to dual class share companies. 1 https://marketsecurities.fca.org.uk/officiallist 2 ttps://www.ey.com/en_uk/news/2024/04/listing-activity-on-london-stock-market-improved-in-q1-20

Impact on attractiveness of the UK listing market
17.13 Some institutional investors challenged us on whether the proposals would increase
attractiveness of the UK as a listing market, which is the key desired outcome of our reforms.
17.14 Firstly, the high value they place on UK companies is due, in part, because of the high
standards of corporate governance in the UK set by regulatory requirements including through listings rules. Actions to dilute these requirements (eg by removing requirements for a shareholder vote on significant and related party transactions) may drive these investors to rebalance their portfolios and reduce the value of their UK investments.
17.15 Secondly, it was argued this could lead to an increased risk in investing in UK companies.
Examples in international jurisdictions were cited, including where there had been serious corporate fraud in jurisdictions where companies did not hold a shareholder vote on related party transactions and where investors disinvested from companies in overseas jurisdictions due to corporate governance concerns. Additional evidence on impacts
17.16 Some institutional investors also shared studies considering the effects of dual class
share structure companies, and the removal of shareholder votes for related party transactions and significant transactions. Dual class share structures
17.17 We have been pointed to studies on the costs and benefits of dual class share
structures on, for example, value premiums fade over time and may turn negative. These studies include the following:

A study by Bebchuk and Kastiel3
that found the benefits of multi-class structures can be expected to decline, and the costs to rise over time. They argue that “controllers have perverse incentives to retain dual class structures even when those structures become inefficient over time”.
A study from the European Corporate Governance Institute4
provides evidence that even at innovative companies where multi-class structures correlate to a value premium at the time of the IPO, that premium dissipates within 6 to 9 years before turning negative.
A study by Baran et al5
that critically assesses how multi class structures correlate with innovation and value creation and finds that there are significant benefits to patent output, quality, creativity, research and development efficiency, and chief executive officer innovative risk taking. However, these benefits dissipate within 10 years after an IPO and at that point the costs of unequal voting structures come to outweigh the benefits. 3 Bebchuk, L.A. and Kastiel, K., 2017. The untenable case for perpetual dual-class stock. Va. L. Rev., 103, p.585. 4 Cremers, M., Lauterbach, B. and Pajuste, A., 2024. The life cycle of dual-class firm valuation. The Review of Corporate Finance Studies, 13(2), pp.459-493. 5 Baran, L., Forst, A. and Tony Via, M., 2023. Dual‐class share structure and innovation. Journal of Financial Research, 46(1), pp.169-202.
A study supporting a testimony from Robert Jackson Jr6
., former commissioner at the U.S. Securities and Exchange Commission, calling for minimum listing standards for multi class companies. The study finds that after the first 2 years of their life cycle, dual class stock tends to underperform those firms that contain a sunset provision.
A study from the European Corporate Governance Institute and the Swiss Finance
Institute7 on dual class voting that finds that young dual-class companies trade at a premium and operate at least as efficiently as young single-class companies. However, as they mature this premium dissipates and dual class companies become less efficient in their margins, innovation, and labour productivity.
17.18 One respondent also pointed us to an Investor Coalition for Equal Votes report
containing case studies of major dual class share companies including Alphabet (Google), Meta (Facebook), Peloton, Snap, and WWE.8 The report argues in favour of shareholder voting rights and describes the benefits of these votes in shaping company decisions and improving company outcomes. DCSSs undermine the ability for shareholders to influence company governance. The value of shareholder votes
17.19 We have also been pointed to further studies on the value in holding shareholder votes,
for example, they can improve disclosures, lead to less expropriation, and reduce shareholder losses from acquisitions. These studies include:
A study by Becht et al9
that compares US and UK company acquisitions and argues that if US companies held shareholder votes they would have made smaller losses on such acquisitions.
A study by Do et al10 that finds voting requirements in M&A transactions lead to
more and timelier disclosures by companies.
17.20 We have also been pointed to a study by Nan Li11 that presents evidence from Related
Party Transactions in India and finds that mandatory shareholder voting mechanisms are effective in reducing expropriation of minority shareholders through related party transactions.
17.21 In relation to reduced investor protections from removing the shareholder vote for
related party transactions, institutional investors also shared with us several international case studies.12 In these, related party transactions were used to defraud investors, for example, by not disclosing/ hiding that a transaction was to benefit a related party or hiding bad debts from investors through undisclosed related party transactions. 6 https://www.sec.gov/files/case-against-corporate-royalty-data-appendix.pdf 7 Kim, H. and Michaely, R., 2019. Sticking around too long? Dynamics of the benefits of dual-class voting. Dynamics of the Benefits of Dual-Class Voting (January 2, 2019). European Corporate Governance Institute (ECGI)-Finance Working Paper, (590), pp.19-09. 8 https://cdn-suk-railpencom-live-001.azureedge.net/media/media/55reei4u/icev-report-2023-undermining-the-shareholder-voice.pdf 9 Becht, M., Polo, A. and Rossi, S., 2021. Should shareholders have a say on acquisitions?. Journal of Applied Corporate Finance, 33(1), pp.48-57. 10 o, T., Garcia Osma, B., Toldrà-Simats, A. and Zhu, F., 2023. Shareholder voting and disclosure in M&As. European Corporate Governance Institute– Finance Working Paper, (879). 11 Li, N., 2021. Do majority‐of‐minority shareholder voting rights reduce expropriation? Evidence from related party transactions. Journal of Accounting Research, 59(4), pp.1385-1423. 12 On Enron Corp. (US), Adelpgia Communications Corp. (US), Refco Inc. (US), Hollinger Inc. and Hollinger International (Canada), and Rite Aid Corp. (US).

Our response to feedback
17.22 We are grateful for the additional evidence and data provided by investors in relation to
our CBA. We consider that this provides useful contextual information in relation to our analysis but that it does not require us to fundamentally change our findings related to the quantifications set out in CP 23/31 and the analysis of impacts on investors set out in paragraphs 101 to 108 of the CBA in CP23/31.
17.23 Below, we set out our responses to specific points raised, followed by our overall
conclusions on why we consider the findings in the CBA do not change as a result of this feedback and the final instruments. Engagement costs to investors
17.24 In paragraphs 101 to 108 of the CBA in CP 23/31, we note the potential for additional
engagement costs for investors due to removal of a shareholder vote for significant transactions and related party transactions. We are grateful to one investor for providing estimates of these costs and have considered the impact of these costs on our CBA.
17.25 The scale of these additional costs is much lower than the potential benefits for the
proposals as assessed in our CBA, which act to lower overall costs of transactions and improve the commercial opportunities of the issuers that these investors are invested in and are part-owners of. Considering the difference in magnitude between the £10k

£24k additional costs of scrutiny per institutional investor and the benefit per M&A
transaction of up to £24.1m, the estimated ‘merger premium’ that could be avoided, would mean that the policy remains net beneficial even with dozens of institutional investors involved in each M&A transaction. Similarly, even if dual class share structures become significantly more common in the future, the estimated additional £9k in annual due diligence cost would not outweigh the benefits estimated in our CBA.
17.26 Additionally, while we will no longer require (under premium listing rules) companies to
hold a shareholder vote on significant and related party transactions, issuers can choose to do so if this is the most efficient option for them.
17.27 In relation to related party transactions, we note on page 165 of CP23/31 that there are
only on average 2 related party transactions a year where a prospectus is not required. Given that the prospectus would include a working capital statement and other relevant information on the issuers, we consider that this would provide appropriate disclosure to investors. Impact on attractiveness of the UK listing market
17.28 We also note the comments made by investors about the potential effects that our
proposals may have on the value they place on UK-listed companies and more broadly on the attractiveness of UK listed markets.
17.29 As set out in the CBA, we believe that our proposed reforms will enable UK listed
companies to compete more effectively in the global M&A market. Moreover, when participating in an M&A transaction, UK-listed companies will be able to extract higher

value from the transaction as under our proposed reforms the costs will be significantly lower than under the existing regulation. We have also heard from issuers and their advisors that making the proposed reforms in CP 23/31 will improve their ability to raise capital in the market.
17.30 We recognised in our CBA that there may be costs associated with a perception of
reduced standards in the UK impacting negatively on the attractiveness of a listing and that we consider it not reasonably practical to measure these potential costs. As discussed in the CBA, we consider it likely that the large savings for issuers will outweigh the potential higher due diligence costs and possibly lower attractiveness of UK stocks for investors. Our proposed reforms are designed to balance attractiveness of the UK for listed and newly listing companies due to proportionate (relatively low-cost) listing rules and the continued attractiveness of UK-listed companies to investors due to the high standards of these listing rules and range of listed firms they can invest in.
17.31 As set out above, there were several unquantifiable benefits and costs of our proposals.
However, our breakeven analysis suggests that, on aggregate, even if we could measure these effects, we believe our proposals to be a net beneficial change to the regime. We hold that our proposed reforms should make the UK a more attractive place to list and, if the benefits of the proposals to listed companies are priced into their valuation, may also make UK-listed companies more attractive to invest in. Additional evidence on impacts
17.32 We have considered the findings in the studies which respondents have pointed us to
and describe how we consider they impact the CBA below.
Dual class share structures
17.33 The studies relating to DCSS provide useful information for potential investors to
consider in the pricing of DCSS securities. Our CBA considered the effects of our proposals and did not seek to assess the performance of DCSS companies over time in our CBA. However, we set out our assessment of the evidence base relating to DCSS below.
17.34 We understand that there may be valuation effects related to initial optimism about
newer DCSS companies and that there is evidence to suggest that this valuation effect dissipates over time. However, we consider that investors can price in these risks, and that such broader investment appraisal is out of the scope of our CBA.
17.35 We also note that there is some evidence in the studies cited to support our inclusion
of a sunset clause for DCSS given the pattern of initial valuation benefits of DCSS that declines over time unless there is a sunset clause provision.
17.36 We note that the results for overseas exchanges might not necessarily apply for UK
listed companies which may be active in different sectors and need to comply with different regulation.
17.37 DCSS is an established business structure in the US with longstanding companies
such as Ford having this structure. There is a large body of research on DCSS, including

commonly cited research that finds significant innovation benefits of DCSS. For example, a study by Cao et al13 finds dual-class shares have significant innovation effect in high-tech sectors, hard-to-innovate industries, firms with higher external takeover threat and firms heavily dependent on external equity financing. Similarly, DeAngelo and DeAngelo14 provide evidence of beneficial effects on innovation of dual class share structures, as they support an ‘innovation view’ which emphasises that dual class structures allow companies to focus on long-term strategy, to reduce managerial myopia, and to better resist short-term expectations that often come with being publicly traded. A 2017 NASDAQ report15 also finds that dual class structures allow investors to benefit in the successes of highly innovative firms. The study by Baran et al included above also argues that DCSS companies have significant short-term benefits related to innovation.
17.38 Given this large body of research on the potential benefits of DCSS, we do not
consider that these additional studies provide information that leads us to reconsider our conclusions in relation to DCSS. As set out above, we did not seek to assess the performance of DCSS companies over time in our CBA, which considered the effects of our proposals only. The value of shareholder votes
17.39 The study by Becht et al supported provides a transatlantic comparison of returns on
acquisitions. The study argues that acquisitions by US listed companies between 1992 and 2010 without shareholder votes had on average lower returns for investors than those acquisitions by UK-listed companies where a shareholder vote was mandated over the same timeframe.
17.40 When estimating the benefits of our proposed change in regulation, we estimated
the additional costs for UK-listed companies to participate in M&As under our existing regulation. This study does not address or challenge the assumptions in the CBA on these additional costs and the ‘premium’ for UK-listed companies to participate in M&As or that UK-listed firms potentially lose out on competitive acquisitions due to the premium associated with mandated shareholder votes.
17.41 The study does suggest that there may be benefits to the profitability of a listed
company and its share value to holding votes when making an acquisition. Specifically, it suggests that there often is a significant negative cumulative aggregate return to an acquisition announcement in the 3 days following the announcement and that holding shareholder votes reduces this effect. While these findings may follow from the analysis of the study, it is not clear that the results would apply to potential new acquisitions made by UK listed companies under our proposed reforms, specifically for transactions with a relative size of >35% of market capitalisation. Moreover, evidence on the shortterm and long-term benefits of acquisitions is mixed. 13 Cao, X., Leng, T., Goh, J. and Malatesta, P., 2020. The innovation effect of dual-class shares: New evidence from US firms. Economic Modelling, 91, pp.347-357. 14 DeAngelo, H. and DeAngelo, L., 1985. Managerial ownership of voting rights: A study of public corporations with dual classes of common stock. Journal of Financial economics, 14(1), pp.33-6 15 Friedman, A. (2017). The promise of market reform: Reigniting America’s economic engine. Harvard Law School Forum on Corporate Governance.

17.42 Although this evidence may be useful for companies making an M&A decision and for
investors in how to value and engage with companies, we do not consider it our remit to suggest to companies the most profitable and shareholder value maximising way of operating. We do not preclude companies from holding shareholder votes if they consider that doing so is likely to lead to better returns or investors from engaging with companies on this issue.
17.43 The study of shareholder voting in India by Nan Li finds that shareholder voting can
reduce expropriation in the case of related party transactions. We note the findings of this study, however, we also note that these findings relate to different market conditions. Therefore, we do not see a need to consider potential greater expropriations as additional cost in the CBA.
17.44 We note the international case studies of problems which have emerged historically
where companies could make related party transactions without a shareholder vote. We also note that UK-listed companies will continue to be subject to regulatory oversight and disclosure requirements on related party transactions. Specifically, when a related party transaction meets the 5% class test, it will be subject to market notification, sponsor fair and reasonable opinion, and board approval. We consider these proposals offer the right balance to continue to support engagement between the company and its shareholders and to enhance market transparency. Conclusions
17.45 Overall, we appreciate the additional evidence and perspectives provided by
investors, which have enriched our understanding and analysis. However, after careful consideration, we maintain that our original findings and conclusions from CP23/31 remain robust.
17.46 We consider the additional costs associated with changes such as the removal of
mandatory shareholder votes are outweighed by the broader benefits to transaction efficiency. Similarly, concerns regarding the valuation and attractiveness of UK-listed companies are mitigated by the expected positive impacts of our proposals, which should enhance the UK’s appeal as a listing destination and support higher value creation in M&A transactions.
17.47 Additionally, the instrument(s) does not differ significantly from the consultative draft
and no significant new evidence has come to light to lead us to revise our assessment of their impact. While we have made some technical changes in light of feedback to the CP to improve the way in which our proposals would work, we have not made changes to the proposals in a way that materially affects the analysis and findings of the CBA. Therefore, the CBA published in CP23/31 still applies.

Annex 1
List of respondents
The list of respondents to our consultation who have consented to the publication of their name is as follows:
Allen and Overy
Aquis Stock Exchange
Arthur Cox LLP
ASCI
Associated British Foods Plc
Association of Investment Companies (AIC)
Baillie Gifford & Co
Brunel Pension Partnership
BDO
BNY Mellon
Bobby Reddy
BVCA
Cambridge University
Candor Partners Limited
CFA Society UK
Chartered Governance Institute UK & Ireland (CGI) City of London Law Society and the Law Society of England and Wales Corporate Reporting Users’ Forum (CRUF) Deloitte Deutsche Numis EOS Federated Hermes Limited Freshfields Bruckhaus Deringer LLP Financial Services Consumer Panel

GC100
Glass Lewis
Herbert Smith Freehills
Innovate Finance
The Institute of Chartered Accountants in England and Wales (ICAEW) International Corporate Governance Network (ICGN) Invesco Investment Association (IA) Jardine Matheson (JM Group Companies) KPMG Listing Authority Advisory Panel and Markets Practitioner Panel LSE Group NEST Corporation Norges Bank Investment Management Novum Securities Limited Panmure Gordon Pensions and Lifetime Savings Association (PLSA) Primary Markets Group Primary Bid PWC Quoted Companies Alliance Railpen Redwheel Rothschild & Co Slaughter and May SME Alliance Limited T.RowePrice

UK Equity Markets Association
UK Finance and The Association for Financial Markets in Europe UK Shareholders’ Association and UK Individual Shareholders’ Society VSA Capital White and Case LLP WISE Wittington Investments Limited

Annex 2
Abbreviations used in this paper
Abbreviation Description
AGM Annual general meeting
CBA Cost benefit analysis
CSA Controlling shareholder agreement
DCSS Dual/multiple class share structure
DEPP Decision Procedure and Penalties Manual DTR Disclosure Guidance and Transparency Rules sourcebook ESG Environmental, social and governance FRC Financial Reporting Council HFI Historical financial information IFRS International Financial Reporting Standards ISSB International Sustainability Standards Board LR Listing Rules sourcebook M&A Merger and acquisition MAR Market Abuse Regulation MO Market Oversight PMB Primary Market Bulletin PMO Primary Market Oversight POATR Public Offers and Admissions to Trading regime Prospectus The assimilated EU law version of Regulation (EU) 2017/1129 (repealing Regulation Directive 2003/71) SICGO Secondary international competitiveness objective

Abbreviation Description
SPAC Special purpose acquisition company
TCFD Taskforce for Climate-related Financial Disclosures UK CGC UK Corporate Governance Code UKLR UK Listing Rules sourcebook All our publications are available to download from www.fca.org.uk. Request an alternative format Please complete this form if you require this content in an alternative format. Or call 020 7066 6087 Sign up for our news and publications alerts

Appendix 1
Made rules (legal instrument – UKLR sourcebook)

FCA 2024/23
UK LISTING RULES INSTRUMENT 2024
Powers exercised
A. The Financial Conduct Authority (“the FCA”) makes this instrument in the exercise of the following powers and related provisions in the Financial Services and Markets Act 2000 (“the Act”):
(1) section 73A (Part 6 Rules);
(2) section 79 (Listing particulars and other documents); (3) section 88 (Sponsors); (4) section 96 (Obligations of issuers of listed securities); (5) section 101 (Part 6 rules: general provisions); (6) section 137A (The FCA’s general rules); (7) section 137T (General supplementary powers); and (8) section 139A (Power of the FCA to give guidance). B. The rule-making powers listed above are specified for the purposes of section 138G(2) (Rule-making instruments) of the Act. Commencement
C. This instrument comes into force on 29 July 2024.
Amendments to the Handbook
D. The Glossary of definitions is amended in accordance with Annex A to this instrument. Making the UK Listing Rules sourcebook (UKLR) E. The Financial Conduct Authority makes the rules and gives the guidance in Annex B to this instrument. F. The UK Listing Rules sourcebook (UKLR) is added to the Listing, Prospectus and Disclosure block within the Handbook, immediately before the Prospectus Regulation Rules sourcebook (PRR). Revocation of the Listing Rules sourcebook (LR) G. The provisions of the Listing Rules sourcebook (LR) are revoked. Notes H. In the Annexes to this instrument, the notes (indicated by “Note:”) are included for the convenience of readers but do not form part of the legislative text.

FCA 2024/23
Citation
I. This instrument may be cited as the UK Listing Rules Instrument 2024.
J. The sourcebook in Annex B to this instrument may be cited as the UK Listing Rules sourcebook (or UKLR). By order of the Board 27 June 2024

FCA 2024/23
Annex A
Amendments to the Glossary of definitions
In this Annex, underlining indicates new text and striking through indicates deleted text, unless otherwise stated. Insert the following new definitions in the appropriate alphabetical position. The text is not underlined. equity shares (commercial companies) equity shares (international commercial companies secondary listing) equity shares (shell companies) a listing of equity shares other than those of:
(1) a closed-ended investment fund;
(2) an open-ended investment company;
(3) a shell company; or
(4) an investment entity that is not a closed-ended investment fund or an open-ended investment company, where the issuer is required to comply with the requirements in UKLR 5 (Equity shares (commercial companies): requirements for admission to listing) and other requirements in the listing rules that are expressed to apply to such securities in this category. a listing of equity shares other than those of:
(1) a closed-ended investment fund;
(2) an open-ended investment company;
(3) a shell company; or
(4) an investment entity that is not a closed-ended investment fund or an open-ended investment company, where the issuer is required to comply with the requirements in UKLR 14 (Equity shares (international commercial companies secondary listing): requirements for listing and continuing obligations) and other requirements in the listing rules that are expressed to apply to such securities in this category. a listing of equity shares other than those of:
(1) a closed-ended investment fund;
(2) an open-ended investment company; or

FCA 2024/23
(3) an investment entity that is not a closed-ended investment fund or an open-ended investment company, where the issuer is required to comply with the requirements in UKLR 13 (Equity shares (shell companies): requirements for listing and continuing obligations) and other requirements in the listing rules that are expressed to apply to such securities in this category. equity shares a listing of equity shares where the listed company:
(transition)
(1) (a) prior to 29 July 2024, had a listing of equity shares in what was previously known as the ‘standard listing (shares)’ category under the Listing Rules sourcebook as it applied immediately prior to 29 July 2024; or (b) satisfies the following:
(i) falls within the definition of an “in-flight applicant” in UKLR TP 1.1R; (ii) prior to 29 July 2024, had applied for a listing in what was previously known as the ‘standard listing (shares)’ category under the Listing Rules sourcebook as it applied immediately prior to 29 July 2024; and (iii) has been admitted to listing prior to 29 July 2025, other than a listing of equity shares that would be eligible for admission to the equity shares (international commercial companies secondary listing) category, the equity shares (shell companies) category or the non-equity shares and nonvoting equity shares category; and (2) is required to comply with the requirements in UKLR 22 (Equity shares (transition): continuing obligations) and other requirements in the listing rules that are expressed to apply to such securities in this category. initial transaction (in UKLR) has the meaning given in UKLR 13.4.2R. non-equity share a share which is not an equity share.

FCA 2024/23 non-equity shares and non-voting equity shares a listing of non-equity shares and non-voting equity shares other than:
(1) non-voting equity shares issued by a company that is a closedended investment fund unless it has a listing of equity shares in the closed-ended investment funds category; (2) non-voting equity shares issued by an open-ended investment company; (3) non-equity shares and non-voting equity shares issued by a company that is an investment entity but not a closed-ended investment fund or an open-ended investment company; and (4) preference shares that are specialist securities, where the issuer is required to comply with the requirements in UKLR 16 (Non-equity shares and non-voting equity shares:
requirements for listing and continuing obligations) and other requirements in the listing rules that are expressed to apply to such securities in this category. non-voting equity share an equity share which does not carry rights to vote at general meetings of the company. qualifying home listing a listing of equity shares admitted to trading on an overseas regulated, regularly operating, recognised open market, which is subject to:
(1) oversight by a regulatory body that is a signatory to the IOSCO Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (or pursuant to which the issuer is subject to direct oversight by such regulatory body) at the time the application for admission to listing is made; and (2) the rules applicable to that overseas regulated, regularly operating, recognised open market without dispensation by virtue of the applicant’s country of incorporation. relevant document (in accordance with the Financial Services and Markets Act 2000 (Service of Notices) Regulations 2001):
(1) a document in relation to which a provision of or made under the Act (other than a provision of or made under Part IX or
Part XXIV of the Act) requires a document of that kind to be
given; or

FCA 2024/23
(2) where a provision of or made under the Act (other than a provision of or made under Part IX or Part XXIV) authorises the imposition of a requirement, a document by which such a requirement is imposed. relevant related a related party transaction which relates to the fees or other party transaction remuneration payable by a closed-ended investment fund in connection with services rendered by an investment manager or a member of the investment manager’s group. reverse takeover a circular relating to a reverse takeover. circular shell company (in UKLR) as defined in UKLR 13.1.4R(3). sponsor UKLR the UK Listing Rules sourcebook. Amend the following definitions as shown. admission or (in LR UKLR) admission of securities to the official list. admission to listing admission to (1) (in LR UKLR) admission of securities to trading on an RIE’s trading market for listed securities. … advertisement (in PRR and LR 4) (as defined in the Prospectus Regulation) a communication with both of the following characteristics:
(a) relating to a specific offer to the public of securities or to an admission to trading on a regulated market; and (b) aiming to specifically promote the potential subscription or acquisition of securities. applicant (1) (in LR UKLR) an issuer which is applying for admission of securities. … associate (1) (in LR UKLR, in relation to a director, substantial shareholder, or person exercising significant influence who is an individual) and, (in DTR, in relation to a related party who is an individual):

FCA 2024/23
(a) that individual’s spouse, civil partner or child (together “the individual’s family”); (b) the trustees (acting as such) of any trust of which the individual or any of the individual’s family is a beneficiary or discretionary object (other than a trust which is either an occupational pension scheme or an employees’ share scheme which does not, in either case, have the effect of conferring benefits on persons all or most of whom are related parties; (c) any company in whose equity securities the individual or any member or members (taken together) of the individual’s family or the individual and any such member or members (taken together) are directly or indirectly interested (or have a conditional or contingent entitlement to become interested) so that they are (or would on the fulfilment of the condition or the occurrence of the contingency be) able:
(i) to exercise or control the exercise of 30% or more of the votes able to be cast at general meetings on all, or substantially all, matters; or (ii) to appoint or remove directors holding a majority of voting rights at board meetings on all, or substantially all, matters; (d) any partnership whether a limited partnership or limited liability partnership in which the individual or any member or members (taken together) of the individual’s family are directly or indirectly interested (or have a conditional or contingent entitlement to become interested) so that they hold or control or would on the fulfilment of the condition or the occurrence of the contingency be able to hold or control:
(i) a voting interest greater than 30% in the partnership; or (ii) at least 30% of the partnership. For the purpose of paragraph (c), if more than one director of the listed company, its parent undertaking or any of its subsidiary undertakings is interested in the equity securities of another company, then the interests of those directors and their

FCA 2024/23 associates will be aggregated when determining whether that company is an associate of the director. (2) (in LR UKLR, in relation to a substantial shareholder or person exercising significant influence which is a company) and, (in DTR, in relation to a related party which is a company):
(a) any other company which is its subsidiary undertaking or parent undertaking or fellow subsidiary undertaking of the parent undertaking; (b) any company whose directors are accustomed to act in accordance with the substantial shareholder’s or person exercising significant influence’s, directions or instructions; (c) any company in the capital of which the substantial shareholder or person exercising significant influence and any other company company under paragraph (1) or (2) taken together, is (or would on the fulfilment of a condition or the occurrence of a contingency be) able to exercise power of the type described in paragraph (1)(c)(i) or (ii) of this definition. … (3) (except in LR UKLR or in relation to a credit-related regulated activity) (in relation to a person (“A”)):
…
(4) (in LR UKLR) (when used in the context of a controlling shareholder who is an individual):
(a) that individual’s spouse, civil partner or child (together “the individual’s family”); (b) the trustees (acting as such) of any trust of which the individual or any of the individual’s family is a beneficiary or discretionary object (other than a trust which is either an occupational pension scheme or an employees’ share scheme which does not, in either case, have the effect of conferring benefits on persons all or most of whom are controlling shareholders); (c) any company in whose equity securities the individual or any member or members (taken together) of the individual’s family or the individual and any such member or members (taken together) are directly or

FCA 2024/23 indirectly interested (or have a conditional or contingent entitlement to become interested) so that they are (or would on the fulfilment of the condition or the occurrence of the contingency be) able:
(i) to exercise or control the exercise of 30% or more of the votes able to be cast at general meetings on all, or substantially all, matters; or (ii) to appoint or remove directors holding a majority of voting rights at board meetings on all, or substantially all, matters; (d) any partnership whether a limited partnership or limited liability partnership in which the individual or any member or members (taken together) of the individual’s family are directly or indirectly interested (or have a conditional or contingent entitlement to become interested) so that they hold or control or would on the fulfilment of the condition or the occurrence of the contingency be able to hold or control:
(i) a voting interest greater than 30% in the partnership; or (ii) at least 30% of the partnership. For the purpose of paragraph (c), if more than one controlling shareholder of the listed company, its parent undertaking or any of its subsidiary undertakings is interested in the equity securities of another company, then the interests of those controlling shareholders and their associates will be aggregated when determining whether that company is an associate of the controlling shareholder. (5) (in LR UKLR) (when used in the context of a controlling shareholder which is a company):
(a) any other company which is its subsidiary undertaking or parent undertaking or fellow subsidiary undertaking of the parent undertaking; (b) any company whose directors are accustomed to act in accordance with the controlling shareholder’s directions or instructions; (c) any company in the capital of which the controlling shareholder and any other company under paragraph (a)

break fee arrangement certificate representing debt securities certificate representing equity securities certificate representing shares charge Chinese wall or information barrier circular FCA 2024/23 or (b) taken together, is (or would on the fulfilment of a condition or the occurrence of a contingency be) able to exercise power of the type described in paragraph (4)(c)(i) or (ii) of this definition;. (in LR UKLR) an arrangement falling within the definition in LR 10.2.6AR an arrangement is a break fee arrangement if the purpose of the arrangement is that a compensatory sum will become payable by a listed company to another party (or parties) to a proposed transaction if the proposed transaction fails or is materially impeded and there is no independent substantive commercial rationale for the arrangement. (in LR UKLR) a certificate representing certain securities where the certificate or other instrument confers rights in respect of debentures, alternative debentures, or government and public securities. (in LR UKLR) a certificate representing certain securities where the certificate or other instrument confers rights in respect of equity securities. (in LR UKLR) a certificate representing certain securities where the certificate or other instrument confers rights in respect of equity shares. (1) (in LR UKLR) (in relation to securitised derivatives) means any payment identified under the terms and conditions of the securitised derivatives. (2) (except in LR UKLR) any fee or charge made to:
(a) a client in connection with designated investment business; or (b) a customer in connection with any insurance distribution activity in respect of a non-investment insurance contract; whether levied by the firm or any other person, including a mark-up or mark-down. an arrangement that requires information held by a person in the course of carrying on one part of its business to be withheld from, or not to be used for, persons with or for whom it acts in the course of carrying on another part of its business. (in LR UKLR) any document issued to holders of listed securities including notices of meetings but excluding prospectuses, listing particulars, annual reports and accounts, interim reports, proxy cards and dividend or interest vouchers.

FCA 2024/23 class …
(4) (in LR UKLR) securities the rights attaching to which are or will be identical and which form a single issue or issues. … class tests (in LR UKLR) the tests set out in LR 10 Annex 1 UKLR 7 Annex 1 (and for certain specialist companies, those tests as modified by LR
10.7 UKLR 7.2), which are used to determine how a transaction is to be
classified for the purposes of the listing rules. closed-ended (in LR UKLR) (in relation to investment entities) an investment entity which is not an open-ended investment company. closed-ended investment fund (in LR UKLR and ESG) an entity:
(a) which is an undertaking with limited liability, including a company, limited partnership, or limited liability partnership; and (b) whose primary object is investing and managing its assets (including pooled funds contributed by holders of its listed securities):
(i) in property of any description; and
(ii) with a view to spreading investment risk. connected person … (5) (in DTR and LR UKLR in relation to a person discharging managerial responsibilities within an issuer) has the meaning given to “person closely associated” in article 3(1)(26) of the Market Abuse Regulation. … … constitution (in LR UKLR) memorandum and articles of association or equivalent constitutional document. contingent liability investment a derivative under the terms of which the client will or may be liable to make further payments (other than charges, and whether or not secured by margin) when the transaction falls to be completed or upon the earlier closing out of his their position.

FCA 2024/23 contract of significance controlling shareholder (in LR UKLR) a contract which represents in amount or value (or annual amount or value) a sum equal to 1% or more, calculated on a group basis where relevant, of:
(a) in the case of a capital transaction or a transaction of which the principal purpose or effect is the granting of credit, the aggregate of the group’s share capital and reserves; or (b) in other cases, the total annual purchases, sales, payments or receipts, as the case may be, of the group. means any person who exercises or controls on their own or together with any person with whom they are acting in concert, 30% or more of the votes able to be cast on all or substantially all matters at general meetings of the company. For the purposes of calculating voting rights, the following voting rights are to be disregarded:
(1) any voting rights which such a person exercises (or controls the exercise of) independently in its capacity as:
(a) bare trustee,;
(b) investment manager,;
(c) collective investment undertaking; or
(d) a long-term insurer in respect of its linked long-term business, if no associate of that person interferes by giving direct or indirect instructions, or in any other way, in the exercise of such voting rights (except to the extent any such person confers or collaborates with such an associate which also acts in its capacity as investment manager, collective investment undertaking or long-term insurer); or (2) any voting rights which a person may hold (or control the exercise of) solely in relation to the direct performance, by way of business, of:
(a) underwriting the issue or sale of securities; or (b) placing securities, where the person provides a firm commitment to acquire any securities which it does not place; or

FCA 2024/23
(c) acquiring securities from existing shareholders or the issuer pursuant to an agreement to procure third-party purchases of securities; and where the conditions below are satisfied:
(i) the activities set out in (2)(a) to (c) are performed in the ordinary course of business; (ii) the securities to which the voting rights attach are held for a consecutive period of 5 trading days or less, beginning with the first trading day on which the securities are held; (iii) the voting rights are not exercised within the period the securities are held; and (iv) no attempt is made directly or indirectly by the person to intervene in (or attempt to intervene in) or exert (or attempt to exert) influence on the management of the issuer within the period the securities are held. convertible securities (in LR UKLR and FEES) a security which is:
(a) convertible into, or exchangeable for, other securities; or (b) accompanied by a warrant or option to subscribe for or purchase other securities. debt security (1) (in LR UKLR and DTR 7) debentures, alternative debentures, debenture stock, loan stock, bonds, certificates of deposit or any other instrument creating or acknowledging indebtedness. … (3) (except in DTR and LR UKLR) any of the following:
… depositary (1) (except in LR UKLR):
…
(2) (in LR UKLR) a person that issues certificates representing certain securities that have been admitted to listing or are the subject of an application for admission to listing.

FCA 2024/23 director (1) (except in COLL, DTR, LR UKLR and PRR) (in relation to any of the following (whether constituted in the United Kingdom or under the law of a country or territory outside it)):
…
…
(3) (in DTR, LR UKLR and PRR) (in accordance with section 417(1)(a) of the Act) in relation to an issuer which is a body corporate, a person occupying in relation to it the position of a director (by whatever name called) and, in relation to an issuer which is not a body corporate, a person with corresponding powers and duties. equity security (1) (in LR UKLR) equity shares and securities convertible into equity shares; and … executive management (in LR UKLR) the executive committee or most senior executive or managerial body below the board (or where there is no such formal committee or body, the most senior level of managers reporting to the chief executive), including the company secretary but excluding administrative and support staff. exercise notice (in LR UKLR) (in relation to securitised derivatives), a document that notifies the issuer of a holder’s intention to exercise its rights under the securitised derivative. exercise price (in LR UKLR) (in relation to securitised derivatives), the price stipulated by the issuer at which the holder can buy or sell the underlying instrument from or to the issuer. exercise time (in LR UKLR) (in relation to securitised derivatives), the time stipulated by the issuer by which the holder must exercise their rights. expiration date (in LR UKLR) (in relation to securitised derivatives), the date stipulated by the issuer on which the holder’s rights in respect of the securitised derivative ends. external management company (in LR UKLR and PRR) has the meaning in PRR 5.3.3R. final terms (in LR UKLR) the document containing the final terms of each issue which is intended to be listed.

FCA 2024/23 founding shareholder
(in UKLR) as defined in LR 5.6.18BR UKLR 13.1.4R(1). group … (4) (in LR UKLR):
(a) (except in LR 6.4.3G, LR 6.5.3G, LR 6.14.3R, LR 6.14.4G, LR 8.7.8R(10), LR 14.2.2R, LR 14.2.3AG, LR 18.2.8R and LR 18.2.9AG UKLR 5.3.2G, UKLR 5.5.3R, UKLR 5.5.4G, UKLR 13.2.5G, UKLR 13.4.16R, UKLR 14.2.2R, UKLR 14.2.3G, UKLR 15.2.9R, UKLR 15.2.10G, UKLR 16.2.1R, UKLR 16.2.2G, UKLR 22.2.2R, UKLR 22.2.3G and UKLR 24.5.12R(9)), an issuer and its subsidiary undertakings (if any); and (b) (in LR 6.4.3G, LR 6.5.3G, LR 6.14.3R, LR 6.14.4G, LR 8.7.8R(10), LR 14.2.2R, LR 14.2.3AG, LR 18.2.8R and LR 18.2.9AG UKLR 5.3.2G, UKLR 5.5.3R, UKLR 5.5.4G, UKLR 13.2.5G, UKLR 13.4.16R, UKLR 14.2.2R, UKLR 14.2.3G, UKLR 15.2.9R, UKLR 15.2.10G, UKLR 16.2.1R, UKLR 16.2.2G, UKLR 22.2.2R, UKLR 22.2.3G and UKLR 24.5.12R(9)), as defined in section 421 of the Act. … guarantee (1) (in LR UKLR) (in relation to securitised derivatives), either:
(a) a guarantee given in accordance with LR 19.2.2 R(3) UKLR 18.2.1R(3) (if any); or (b) any other guarantee of the issue of securitised derivatives. … in the money (1) (in LR UKLR) (in relation to securitised derivatives):
(a) where the holder has the right to buy the underlying instrument or instruments from the issuer, when the settlement price is greater than the exercise price; or (b) where the holder has the right to sell the underlying instrument or instruments to the issuer, when the exercise price is greater than the settlement price; …

FCA 2024/23 investment entity (in LR UKLR) an entity whose primary object is investing and managing its assets with a view to spreading or otherwise managing investment risk. investment manager (1) (except in LR UKLR) a person who, acting only on behalf of a client:
…
(2) (in LR UKLR) a person who, on behalf of a client, manages investments and is not a wholly-owned subsidiary of the client. issuer … (3) (in LR UKLR and FEES in relation to LR UKLR) any company or other legal person or undertaking (including a public sector issuer), any class of whose securities has been admitted to listing or is the subject of an application for admission to listing. … list of sponsors (in LR UKLR) the list of sponsors maintained by the FCA in accordance with section 88(3)(a) of the Act. listed (1) (except in LR UKLR, SUP 11, INSPRU and IPRU(INS)) included in an official list. … (3) (in LR UKLR) admitted to the official list maintained by the FCA in accordance with section 74 of the Act. listed company (in LR UKLR and DEPP) a company that has any class of its securities listed. listing particulars (in LR UKLR and PRR) (in accordance with section 79(2) of the Act), a document in such form and containing such information as may be specified in listing rules. London Stock Exchange (in LR UKLR) London Stock Exchange Plc. long-term incentive scheme (in LR UKLR) any arrangement (other than a retirement benefit plan, a deferred bonus or any other arrangement that is an element of an executive director’s remuneration package) which may involve the receipt of any asset (including cash or any security) by a director or employee of the group:

FCA 2024/23
(a) which includes one or more conditions in respect of service and/or performance to be satisfied over more than one financial year; and (b) pursuant to which the group may incur (other than in relation to the establishment and administration of the arrangement) either cost or a liability, whether actual or contingent. major subsidiary undertaking (in LR UKLR) a subsidiary undertaking that represents 25% or more of the aggregate of the gross assets or profits (after deducting all charges except taxation) of the group. member (1) (except in PROF, LR UKLR, EG 16 and REC) a person admitted to membership of the Society or any person by law entitled or bound to administer his their affairs. (2) (in PROF, LR UKLR and EG 16) (as defined in section 325(2) of the Act (FCA’s general duty)) (in relation to a profession) a person who is entitled to practise that profession and, in practising it, is subject to the rules of the relevant designated professional body, whether or not he is they are a member of that body. … mineral company (in LR UKLR) a company or group, whose principal activity is, or is planned to be, the extraction of mineral resources (which may or may not include exploration for mineral resources). mineral resources (in LR UKLR) include metallic and non-metallic ores, mineral concentrates, industrial minerals, construction aggregates, mineral oils, natural gases, hydrocarbons and solid fuels including coal. minority ethnic background (in LR UKLR) from one of the following categories of ethnic background, as set out in the tables in LR 9 Annex 2.1R(b) and LR 14
Annex 1.1R(b) UKLR 6 Annex 1R(2), UKLR 14 Annex 1R(2), UKLR
16 Annex 1R(2) and UKLR 22 Annex 1R(2), excluding the category “White British or other White (including minority-white groups)”:
(1)
(a)
Asian/Asian British;
(2)
(b)
Black/African/Caribbean/Black British;
(3)
(c)
Mixed/multiple ethnic groups; and

FCA 2024/23
(4) Other ethnic group, including Arab.
(d) miscellaneous (in LR UKLR) securities which are not:
securities
(a) shares; or
(b) debt securities; or
(c) asset backed securities; or
(d) certificate certificates representing debt securities; or (e) convertible securities which convert to debt securities; or (f) convertible securities which convert to equity securities; or (g) convertible securities which are exchangeable for securities of another company; or (h) certificate certificates representing certain securities; or (i) securitised derivatives. modified report (in LR UKLR) an accountant’s or auditor’s report:
(a) in which the opinion is modified; or
(b) which contains an emphasis-of-matter paragraph. national storage (in LR UKLR, PRR and DTR) the system identified by the FCA on its mechanism website as the national storage mechanism for regulatory announcements and certain documents published by issuers. net annual rent (in LR UKLR) (in relation to a property) the current income or income estimated by the valuer:
(a) ignoring any special receipts or deductions arising from the property; (b) excluding Value Added Tax and before taxation (including tax on profits and any allowances for interest on capital or loans); and (c) after making deductions for superior rents (but not for amortisation) and any disbursements including, if appropriate, expenses of managing the property and allowances to maintain it in a condition to command its rent.

FCA 2024/23 offer …
(3) (in LR UKLR and PRR) an offer of transferable securities to the public. … offer for sale (in LR UKLR) an invitation to the public by, or on behalf of, a third party to purchase securities of the issuer already in issue or allotted (and may be in the form of an invitation to tender at or above a stated minimum price). offer for subscription (in LR UKLR) an invitation to the public by, or on behalf of, an issuer to subscribe for securities of the issuer not yet in issue or allotted (and may be in the form of an invitation to tender at or above a stated minimum price). offer of transferable securities to the public (in PRR and LR UKLR) (as defined in the Prospectus Regulation) a communication to persons in any form and by any means, presenting sufficient information on the terms of the offer and the securities to be offered, so as to enable an investor to decide to purchase or subscribe for those securities. This definition also applies to the placing of securities through financial intermediaries. offeror (1) (in MAR 1 (Market Abuse) and LR 5.2.10R to LR 5.2.11DR UKLR 21.2.11R to UKLR 21.2.16R) an offeror as defined in the Takeover Code. … (3) (in LR UKLR (except LR 5.2.10R to LR 5.2.11DR UKLR 21.2.11R to UKLR 21.2.16R) and FEES provisions in relation to PRR) (as defined in the Prospectus Regulation) a person who makes an offer of transferable securities to the public. official list (1) (in LR UKLR) the list maintained by the FCA in accordance with section 74(1) of the Act for the purposes of Part VI of the Act. (2) (except in LR UKLR):
… open offer (in LR UKLR and DTR 5) an invitation to existing securities holders to subscribe or purchase securities in proportion to their holdings, which is not made by means of a renounceable letter (or other negotiable document).

FCA 2024/23 open-ended investment company
(as defined in section 236 of the Act (Open-ended investment companies)) a collective investment scheme which satisfies both the property condition and the investment condition:
(a) the property condition is that the property belongs beneficially to, and is managed by or on behalf of, a body corporate (“BC”) having as its purpose the investment of its funds with the aim of:
(i) spreading investment risk; and
(ii) giving its members the benefit of the results of the management of those funds by or on behalf of that body; (b) the investment condition is that, in relation to BC, a reasonable investor would, if he they were to participate in the scheme:
(i) expect that he they would be able to realise, within a period appearing to him them to be reasonable, his their investment in the scheme (represented, at any given time, by the value of shares in, or securities of, BC held by him them as a participant in the scheme); and (ii) be satisfied that his their investment would be realised on a basis calculated wholly or mainly by reference to the value of property in respect of which the scheme makes arrangements. (see also investment company with variable capital.) overseas company (in LR UKLR) a company incorporated outside the United Kingdom. percentage ratio (1) (in LR UKLR) (in relation to a transaction) the figure, expressed as a percentage, that results from applying a calculation under a class test to the transaction; … person exercising significant influence (in LR UKLR) in relation to a listed company, a person or entity which exercises significant influence over that listed company. placing (in LR UKLR) a marketing of securities already in issue but not listed or not yet in issue, to specified persons or clients of the sponsor or any securities house assisting in the placing, which does not involve an offer to the public or to existing holders of the issuer’s securities generally.

FCA 2024/23 probable reserves (in LR UKLR):
(a) in respect of mineral companies primarily involved in the extraction of oil and gas resources, those reserves which are not yet proven but which, on the available evidence and taking into account technical and economic factors, have a better than 50% chance of being produced; and (b) in respect of mineral companies other than those primarily involved in the extraction of oil and gas resources, those measured measured and/or indicated mineral resources, which are not yet proven but of which detailed technical and economic studies have demonstrated that extraction can be justified at the time of the determination and under specified economic conditions. profit estimate (in PR and LR UKLR) (as defined in the PR Regulation) a profit forecast for a financial period which has expired and for which results have not yet been published. profit forecast (in PR and LR UKLR) (as defined in the PR Regulation) a form of words which expressly states or by implication indicates a figure or a minimum or maximum figure for the likely level of profits or losses for the current financial period and/or financial periods subsequent to that period, or contains data from which a calculation of such a figure for future profits or losses may be made, even if no particular figure is mentioned and the word “profit” is not used. property (in LR UKLR) freehold, heritable or leasehold property. property company (in LR UKLR) a company primarily engaged in property activities including:
(a) the holding of properties (directly or indirectly) for letting and retention as investments; (b) the development of properties for letting and retention as investments; (c) the purchase and development of properties for subsequent sale; or (d) the purchase of land for development properties for retention as investments. prospectus (1) (in LR UKLR, and PRR, FEES, FUND 3 (Requirements for managers of alternative investment funds) and in the definition

FCA 2024/23 of non-retail financial instrument) a prospectus required under the Prospectus Regulation. (2) (except in LR UKLR and PRR) (in relation to a collective investment scheme) a document containing information about the scheme and complying with the requirements in COLL 4.2.5R (Table: contents of the prospectus), COLL 8.3.4R (Table: contents of qualified investor scheme prospectus), COLL 9.3.2R (Additional information required in the prospectus for an application under section 272), or COLL 15.4.5R (Table: contents of a long-term asset fund prospectus), applicable to a prospectus of a scheme of the type concerned. proven reserves (in LR UKLR):
(a) in respect of mineral companies primarily involved in the extraction of oil and gas resources, those reserves which, on the available evidence and taking into account technical and economic factors, have a better than 90% chance of being produced; and (b) in respect of mineral companies other than those primarily involved in the extraction of oil and gas resources, those measured mineral resources of which detailed technical and economic studies have demonstrated that extraction can be justified at the time of the determination, and under specified economic conditions. public international body (in LR UKLR) the African Development Bank, the Asian Development Bank, the Asian Infrastructure Investment Bank, the Caribbean Development Bank, the Council of Europe Development Bank, the European Atomic Energy Community, the European Bank for Reconstruction and Development, the European Company for the Financing of Railroad Stock, the EU, the European Investment Bank, the Inter-American Development Bank, the International Bank for Reconstruction and Development, the International Finance Corporation, the International Monetary Fund and the Nordic Investment Bank. public shareholder (in UKLR) as defined in LR 5.6.18BR UKLR 13.1.4R(2). recognised scheme (1) (other than in LR UKLR) a scheme that is:
…
(2) (in LR UKLR) a scheme recognised for the purpose of part XVII of the Act.

FCA 2024/23 related party (1) (in LR UKLR) as defined in LR 11.1.4R UKLR 8.1.11R; … related party transaction (1) (in LR UKLR) as defined in LR 11.1.5R UKLR 8.1.7R; … reverse takeover (in LR UKLR) a transaction classified as a reverse takeover under LR
5.6 has the meaning given in UKLR 7.1.4R.
rights issue (in LR UKLR and DTR 5) an offer to existing security holders to subscribe or purchase further securities in proportion to their holdings made by means of the issue of a renounceable letter (or other negotiable document) which may be traded (as “nil paid” rights) for a period before payment for the securities is due. securitised derivative an option or contract for differences which, in either case, is listed under LR 19 UKLR 18 of the listing rules listing rules (including such an option or contract for differences which is also a debenture). security (1) (except in LR UKLR, CONC and SUP 16 Annex 21R) (in accordance with article 3(1) of the Regulated Activities Order (Interpretation)) any of the following investments specified in that Order:
…
(2) (in LR UKLR) (in accordance with section 102A of the Act) anything which has been, or may be, admitted to the official list. … settlement price (in LR UKLR) (in relation to securitised derivatives), the reference price or prices of the underlying instrument or instruments stipulated by the issuer for the purposes of calculating its obligations to the holder. shadow director (in LR UKLR) as in sub-paragraph (b) of the definition of director in
section 417(1) of the Act.
share (1) (except in COLL, LR UKLR, DTR, REC, SUP 11 (Controllers and close links) and SUP 16 (Reporting requirements)) the investment, specified in article 76 of the Regulated Activities Order (Shares etc), which is in summary: a share or stock in the share capital of:

shell company significant transaction sovereign controlling shareholder specialist investor specialist securities FCA 2024/23 … … (3) (in DTR and LR UKLR, and in FEES where relevant to DTR or LR UKLR) (in accordance with section 540(1) of the Companies Act 2006) a share in the share capital of a company, and includes:
(a) stock (except where a distinction between shares and stock is express or implied); (b) preference shares; and (c) in chapters 4, 5, 6 and 7 of DTR a convertible share. … as defined in LR 5.6.5A UKLR 13.1.2R. (1) (in FEES) a transaction where:
…
(b) …
…
(iii) …
(2) (in UKLR) a transaction classified as a significant transaction under UKLR 7. (in relation to a company with or applying for a listing of equity shares or certificates representing shares in the equity shares (commercial companies) category of premium listing (sovereign controlled commercial company)) a State which exercises or controls 30% or more of the votes able to be cast on all or substantially all matters at general meetings of the company. (in LR UKLR) an investor who is particularly knowledgeable in investment matters. (in LR UKLR and FEES) securities which, because of their nature, are normally bought and traded by a limited number of investors who are particularly knowledgeable in investment matters.

FCA 2024/23 specialist (in LR UKLR) a securitised derivative which because of its nature is securitised normally bought and traded by a limited number of investors who are derivatives particularly knowledgeable in investment matters. specified weighted has the meaning given to it in LR 9.2.22CR weighted voting rights voting rights shares shares of a class which meet the conditions set out in UKLR 5.4.5R(1) to (4). sponsor (1) (in LR UKLR, except in LR 5.6.18AG) a person approved, under section 88 of the Act by the FCA, as a sponsor. (1A) (in LR 5.6.18AG as defined in LR 5.6.18BR. [deleted] … sponsor a declaration submitted by a sponsor to the FCA as required under LR declaration 8.4.3R UKLR 24.3.3R (Application for listing New applicants:
procedure), LR 8.4.9R UKLR 24.3.7R (Further application for listing Further issues: procedure), LR 8.4.13R UKLR 24.3.11R (Production of circular Circulars: procedure) or LR 8.4.14R UKLR 24.3.12R (Transfer between listing category Applying for transfer between listing categories). sponsor service a service relating to a matter referred to in LR 8.2 UKLR 4.2 that a sponsor provides or is requested or appointed to provide, including preparatory work that a sponsor may undertake before a decision is taken as to whether or not it will act as sponsor for a listed company listed issuer or applicant or in relation to a particular transaction, and including all the sponsor’s communications with the FSA FCA in connection with the service. But nothing in this definition is to be taken as requiring a sponsor when requested to agree to act as a sponsor for a company or in relation to a transaction. subsidiary … undertaking (3) (in LR UKLR and BSOCS) as defined in section 1162 of the Companies Act 2006. substantial as defined in LR 11.1.4AR UKLR 8.1.12R. shareholder supplementary (in LR UKLR) (in accordance with section 81(1) of the Act), listing particulars supplementary listing particulars containing details of the change or new matter. target (in LR UKLR) the subject of a class 1 transaction significant transaction, initial transaction or reverse takeover.

FCA 2024/23 tender offer (in LR UKLR) an offer by a company to purchase all or some of a class of its listed equity securities at a maximum or fixed price (that may be established by means of a formula) that is:
(a) communicated to all holders of that class by means of a circular or advertisement in two national newspapers; (b) open to all holders of that class on the same terms for at least seven days; and (c) open for acceptance by all holders of that class pro rata to their existing holdings. trading day … (4) (in LR UKLR and DTR) any day of normal trading in a share on a regulated market or MTF in the United Kingdom for this share. transferable security (1) (in PRR, LR UKLR and DTR) (as defined in section 102A of the Act) anything which is a transferable security for the purposes of MiFIR, other than money-market instruments for the purposes of MiFIR which have a maturity of less than 12 months. … trust deed (1) (in LR UKLR) a trust deed or equivalent document securing or constituting debt securities. … underlying instrument (in LR UKLR) (in relation to securitised derivatives) means either:
(a) if the securitised derivative is an option or debt security with the characteristics of an option, any of the underlying investments listed in article 83 of the Regulated Activities Order; or (b) if the securitised derivative is a contract for differences or debt security with the characteristics of a contract for differences, any factor by reference to which a profit or loss under article 85 of the Regulated Activities Order can be calculated. vendor consideration placing (in LR UKLR) a marketing, by or on behalf of vendors, of securities that have been allotted as consideration for an acquisition.

FCA 2024/23
Delete the following definitions. The text is not struck through. class 1 acquisition (in LR) a class 1 transaction that involves an acquisition by the relevant listed company or its subsidiary undertaking. class 1 circular (in LR) a circular relating to a class 1 transaction or a transaction which must comply with the requirements of a class 1 transaction. class 1 disposal (in LR) a class 1 transaction that consists of a disposal by the relevant listed company or its subsidiary undertaking. class 1 transaction (in LR and FEES) a transaction classified as a class 1 transaction under LR 10. class 2 transaction (in LR) a transaction classified as a class 2 transaction under LR 10. connected client (in LR) in relation to a sponsor or securities house, any client of the sponsor or securities house who is:
(a) a partner, director, employee or controller (as defined in
section 422 of the Act) of the sponsor or securities house or of
an undertaking described in paragraph (d); or (b) the spouse, civil partner or child of any individual described in paragraph (a); or (c) a person in his capacity as a trustee of a private trust (other than a pension scheme or an employees’ share scheme) the beneficiaries of which include any person described in paragraph (a) or (b); or (d) an undertaking which in relation to the sponsor or securities house is a group undertaking. deferred bonus (in LR) any arrangement pursuant to the terms of which an employee or director may receive a bonus (including cash or any security) in respect of service and/or performance in a period not exceeding the length of the relevant financial year notwithstanding that the bonus may, subject only to the person remaining a director or employee of the group, be receivable by the person after the end of the period to which the award relates. defined benefit scheme in relation to a director, means a pension scheme which is not a money purchase scheme.

FCA 2024/23 financial information table
(in LR) financial information presented in a tabular form that covers the reporting period set out in LR 13.5.13R in relation to the entities set out in LR 13.5.14R, and to the extent relevant LR 13.5.17AR. LR the Listing Rules sourcebook. premium listing (a) in relation to equity shares (other those of a closed-ended investment fund or of a sovereign controlled commercial company that is required to comply with the requirements in LR 21), means a listing where the issuer is required to comply with those requirements in LR 6 (Additional requirements for premium listing (commercial company)) and the other requirements in the listing rules that are expressed to apply to such securities with a premium listing; (b) in relation to equity shares of a closed-ended investment fund, means a listing where the issuer is required to comply with the requirements in LR 15 (Closed-Ended Investment Funds:
Premium listing) and other requirements in the listing rules that are expressed to apply to such securities with a premium listing; (c) [deleted] (d) in relation to equity shares of a sovereign controlled commercial company, means a listing where the issuer is required to comply with the requirements in LR 21 (Sovereign controlled commercial companies: Premium listing) and other requirements in the listing rules that are expressed to apply to such securities with a premium listing; and (e) in relation to certificates representing shares of a sovereign controlled commercial company, means a listing where the issuer is required to comply with the requirements in LR 21 (Sovereign controlled commercial companies: Premium listing) and other requirements in the listing rules that are expressed to apply to such securities with a premium listing. premium listing (closed-ended investment fund) a premium listing of equity shares of a closed-ended investment fund. premium listing (commercial company) a premium listing of equity shares (other than those of a closedended investment fund or of a sovereign controlled commercial company that is required to comply with the requirements in LR 21).

premium listing
(sovereign controlled commercial company) property valuation report related party circular scientific research based company standard listing standard listing (open-ended investment company) standard listing (shares) unrecognised scheme FCA 2024/23 a premium listing of:
(a) equity shares (other than those of a closed-ended investment fund); or (b) certificates representing shares, where the issuer of the equity shares or, in the case of certificates representing shares, the issuer of the equity shares which the certificates represent is a sovereign controlled commercial company and is required to comply with the requirements in LR 21 and other requirements in the listing rules that are expressed to apply to securities in this category. (in LR) a property valuation report prepared by an independent expert in accordance with:
(1) for an issuer incorporated in the United Kingdom, the Channel Islands or the Isle of Man, the Appraisal and Valuation Standards (5th edition) issued by the Royal Institution of Chartered Surveyors; or (2) for an issuer incorporated in any other place, either the standards referred to in paragraph (1) of this definition or the International Valuation Standards (7th edition) issued by the International Valuation Standards Committee. (in LR) a circular relating to a related party transaction. (in LR) a company primarily involved in the laboratory research and development of chemical or biological products or processes or any other similar innovative science based company. in relation to securities, means a listing that is not a premium listing. a standard listing of equity shares of an open-ended investment company. a standard listing of shares other than equity shares of an openended investment company or preference shares that are specialist securities. (in LR) a collective investment scheme which is neither a recognised scheme nor a scheme that is constituted as an authorised unit trust scheme or authorised contractual scheme.

FCA 2024/23
Annex B
UK Listing Rules sourcebook (UKLR)
In this Annex all text is new and is not underlined. Insert the following new sourcebook, UK Listing Rules sourcebook (UKLR). 1 Preliminary: all securities
1.1 Introduction
Application
1.1.1 R UKLR applies as follows:
(1) all of UKLR (other than UKLR 24) applies to an issuer; and (2) UKLR 1 and UKLR 24 apply to a sponsor and a person applying for approval as a sponsor. [Note: The following table provides a general indication of which chapters in UKLR are relevant to applicants, issuers, listed companies, sponsors and persons applying to be sponsors. The table does not provide definitive guidance as to the provisions which will be relevant to a particular person, nor does it take account of exceptions that may apply in respect of particular persons.] UKLR 1 – Preliminary: all securities Applies to all issuers, sponsors and persons applying for approval as a sponsor. UKLR 2 – Listing Principles Applies to all listed companies. UKLR 3 – Requirements for listing:
all securities
Applies to all applicants for admission to listing unless a rule is specified only to apply to a particular type of applicant or security. UKLR 4 – Sponsors:
responsibilities of issuers
Applies to issuers with a listing and applicants for admission to listing in the equity shares (commercial companies) category, the closedended investment funds category or the equity shares (shell companies) category. UKLR 5 – Equity shares (commercial companies):
Applies to applicants for admission to listing in the equity shares (commercial companies) category.

FCA 2024/23 requirements for admission to listing UKLR 6 – Equity shares (commercial companies):
continuing obligations
Applies to companies with a listing in the equity shares (commercial companies) category. UKLR 7 – Equity shares (commercial companies):
significant transactions and reverse takeovers Applies to companies with a listing in the equity shares (commercial companies) category. UKLR 8 – Equity shares (commercial companies): related party transactions Applies to companies with a listing in the equity shares (commercial companies) category. UKLR 9 – Equity shares (commercial companies): further issuances, dealing in own securities and treasury shares Applies to companies with a listing in the equity shares (commercial companies) category. UKLR 10 – Equity shares (commercial companies): contents of circulars Applies to companies with a listing in the equity shares (commercial companies) category. UKLR 11 – Closed-ended Applies to issuers with a listing and investment funds: requirements for applicants for admission to listing listing and continuing obligations in the closed-ended investment funds category. UKLR 12 – Open-ended investment Applies to issuers with a listing and companies: requirements for listing applicants for admission to listing and continuing obligations in the open-ended investment companies category. UKLR 13 – Equity shares (shell Applies to issuers with a listing and companies): requirements for applicants for admission to listing listing and continuing obligations in the equity shares (shell companies) category. UKLR 14 – Equity shares Applies to issuers with a listing and (international commercial applicants for admission to listing companies secondary listing): in the equity shares (international requirements for listing and commercial companies secondary continuing obligations listing) category. UKLR 15 – Certificates representing certain securities (depositary receipts): requirements for listing and continuing obligations Applies to issuers with a listing and applicants for admission to listing in the certificates representing certain securities category.

FCA 2024/23
UKLR 16 – Non-equity shares and non-voting equity shares:
requirements for listing and continuing obligations Applies to issuers with a listing and applicants for admission to listing in the non-equity shares and nonvoting equity shares category. UKLR 17 – Debt and debt-like securities: continuing obligations Applies to issuers with a listing in the debt and debt-like securities category. UKLR 18 – Securitised derivatives:
requirements for listing and continuing obligations Applies to issuers with a listing and applicants for admission to listing in the securitised derivatives category. UKLR 19 – Warrants, options and other miscellaneous securities:
continuing obligations
Applies to issuers with a listing in the warrants, options and other miscellaneous securities category. UKLR 20 – Admission to listing:
processes and procedures
Applies to applicants for admission to listing.
UKLR 21 – Suspending, cancelling and restoring listing and transfer between listing categories: all securities Applies to all issuers. UKLR 22 – Equity shares (transition): continuing obligations Applies to companies with a listing in the equity shares (transition) category. UKLR 23 – Listing particulars for professional securities market and certain other securities: all securities Applies to applicants for admission to listing which are required to prepare listing particulars. UKLR 24 – Sponsors Applies to sponsors and persons applying for approval as a sponsor. [Note: Other parts of the Handbook that may also be relevant to issuers or sponsors include the Disclosure Guidance and Transparency Rules sourcebook (DTR), the Prospectus Regulation Rules sourcebook (PRR), the Conduct of Business sourcebook (COBS), the Decision Procedure and Penalties manual (DEPP), Chapter 9 of the Supervision manual (SUP) and General Provisions (GEN). The Enforcement Guide (EG) may also be relevant to issuers or sponsors.] Modifying rules and consulting the FCA 1.2

FCA 2024/23
Modifying or dispensing with rules
1.2.1 R (1) The FCA may dispense with or modify the listing rules in such cases
and by reference to such circumstances as it considers appropriate (subject to the Act). (2) A dispensation or modification may be either unconditional or subject to specified conditions. (3) If an issuer or sponsor has applied for, or been granted, a dispensation or modification, it must notify the FCA immediately it becomes aware of any matter which is material to the relevance or appropriateness of the dispensation or modification. (4) The FCA may revoke or modify a dispensation or modification.
1.2.2 R (1) An application to the FCA to dispense with or modify a listing rule
must be in writing.
(2) The application must:
(a) contain a clear explanation of why the dispensation or modification is requested; (b) include details of any special requirements – for example, the date by which the dispensation or modification is required; (c) contain all relevant information that should reasonably be brought to the FCA’s attention; (d) contain any statement or information that is required by the listing rules to be included for a specific type of dispensation or modification; and (e) include copies of all documents relevant to the application.
1.2.3 G An application to dispense with or modify a listing rule should ordinarily
be made:
(1) for a listing rule that is a continuing obligation, at least 5 business days before the proposed dispensation or modification is to take effect; and (2) for any other listing rule, at least 10 business days before the proposed dispensation or modification is to take effect. Early consultation with the FCA
1.2.4 G An issuer or sponsor should consult with the FCA at the earliest possible
stage if it:

FCA 2024/23
(1) is in doubt about how the listing rules apply in a particular situation; or (2) considers that it may be necessary for the FCA to dispense with or modify a listing rule.
1.2.5 G Where a listing rule refers to consultation with the FCA, submissions
should be made in writing other than in circumstances of exceptional urgency or in the case of a submission from a sponsor in relation to the provision of a sponsor service. Address for correspondence The Financial Conduct Authority 12 Endeavour Square London, E20 1JN Tel: 020 7066 8333 [Note: https://www.fca.org.uk/markets/primary-markets/contact/requestindividual-guidance]
1.3 Information gathering and publication
Information gathering
1.3.1 R An issuer must provide to the FCA as soon as possible:
(1) any information and explanations that the FCA may reasonably require to decide whether to grant an application for admission; (2) any information that the FCA considers appropriate to protect investors or ensure the smooth operation of the market; and (3) any other information or explanation that the FCA may reasonably require to verify whether listing rules, disclosure requirements, transparency rules and corporate governance rules are being and have been complied with. The FCA may require issuer to publish information
1.3.2 R (1) The FCA may, at any time, require an issuer to publish such
information in such form and within such time limits as it considers appropriate to protect investors or to ensure the smooth operation of the market.

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(2) If an issuer fails to comply with a requirement under (1), the FCA may itself publish the information (after giving the issuer an opportunity to make representations as to why it should not be published). Misleading information not to be published
1.3.3 R An issuer must take reasonable care to ensure that any information it
notifies to a RIS or makes available through the FCA is not misleading, false or deceptive and does not omit anything likely to affect the import of the information. Notification when a RIS is not open for business
1.3.4 R If an issuer is required to notify information to a RIS at a time when a RIS
is not open for business, it must distribute the information as soon as possible to:
(1) not less than 2 national newspapers in the United Kingdom; (2) 2 newswire services operating in the United Kingdom; and (3) a RIS for release as soon as it opens. Key persons contact details
1.3.5 R (1) An issuer must ensure that the FCA is provided, at all times, with
up-to-date contact details of at least 2 of its executive directors (or, where the issuer has no executive directors, at least 2 of its directors), including their name, business telephone number and business email address. Where the issuer has only 1 executive director or has only 1 director, then the issuer must ensure the FCA is provided with the details of this director. (2) The issuer must notify the FCA of any changes to the contact details under (1) as soon as possible.
1.3.6 G The directors whose contact details are provided under UKLR 1.3.5R will
be expected to be key persons who are able to assist the FCA regarding matters that require an urgent response. Service of notices
1.3.7 R An issuer must ensure that the FCA is provided, at all times, with up-todate contact details of a nominated person at the issuer, including their
address for the purposes of receiving service of relevant documents.
1.3.8 R The address referred to in UKLR 1.3.7R must be:
(1) an email address where the issuer provides written consent to receive service of relevant documents by email; or

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(2) a postal address in the UK where written consent to email service mentioned in (1) above is not given. [Note: There are additional requirements to provide first point of contact details set out in UKLR 6.2.19R including as applied by UKLR 11.4.1R, UKLR 12.3.6R, UKLR 13.3.11R, UKLR 14.3.8R, UKLR 16.3.7R and UKLR 22.2.8R.]
1.4 Miscellaneous
Appointment of sponsors
1.4.1 R (1) If it appears to the FCA that there is, or there may be, a breach of
the listing rules, the disclosure requirements or the transparency rules by an issuer with a listing of shares in:
(a) the equity shares (commercial companies) category; (b) the closed-ended investment funds category; or (c) the equity shares (shell companies) category, the FCA may in writing require the issuer to appoint a sponsor to advise the issuer on the application of the listing rules, the disclosure requirements and the transparency rules. (2) If required to do so under (1), an issuer must, as soon as practicable, appoint a sponsor to advise it on the application of the listing rules, the disclosure requirements and the transparency rules. [Note: UKLR 4.2 sets out the various circumstances in which an issuer must appoint, or obtain guidance from, a sponsor.] Overseas companies
1.4.2 R If a listing rule refers to a requirement in legislation applicable to a listed
company incorporated in the United Kingdom, a listed overseas company must comply with the requirement so far as:
(1) information available to it enables it to do so; and (2) compliance is not contrary to the law in its country of incorporation.
1.4.3 R A listed overseas company must, if required to do so by the FCA, provide
the FCA with a letter from an independent legal adviser explaining why compliance with a requirement referred to in UKLR 1.4.2R is contrary to the law in its country of incorporation. English language

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1.4.4 R A document that is required under a listing rule to be filed, notified to a
RIS, provided to the FCA or sent to security holders must be in English. Fees
1.4.5 G The provisions relating to periodic fees for issuers and sponsors are set
out in FEES 1, 2 and 4.
Electronic communication
1.4.6 G If the listing rules require an issuer to send documents to its security
holders, the issuer may, in accordance with DTR 6.1.8R, use electronic means to send those documents.
1.4.7 R A reference to a copy (or copies) of a document in the listing rules
includes a copy (or copies) of a document produced, recorded or stored using electronic means. Use of an RIS
1.4.8 R Where a listing rule requires an issuer subject to DTR 6.3.1R to use the
services of a RIS, the issuer must comply with the provisions of DTR 6.3.
1.4.9 R Where a listing rule requires an issuer that is not subject to DTR 6.3.1R to
use the services of a RIS, the issuer must comply with the provisions of DTR 6.3, except in relation to information which is required to be disclosed under articles 17 and 19 of the Market Abuse Regulation or the DTR.
1.5 Listing categories
1.5.1 R An issuer must comply with the rules that are applicable to every security
in the category of listing which applies to each security the issuer has listed. The categories of listing are:
(1) equity shares (commercial companies);
(2) closed-ended investment funds;
(3) open-ended investment companies;
(4) equity shares (shell companies);
(5) equity shares (international commercial companies secondary listing); (6) certificates representing certain securities; (7) non-equity shares and non-voting equity shares; (8) debt and debt-like securities;

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(9) securitised derivatives;
(10) warrants, options and other miscellaneous securities; and (11) equity shares (transition).
1.5.2 R An issuer must inform the FCA if the characteristics of a security change
so that the security no longer meets the definition of a security in the category in which it has been placed. Misleading statements about status
1.5.3 R An issuer that has securities listed in a particular listing category must not
describe itself or hold itself out (in whatever terms) as being listed in a different listing category from the one in which those securities are listed. An issuer must not make any representation which suggests, or which is reasonably likely to be understood as suggesting, that it has a listing in a different listing category or complies, or is required to comply, with the requirements that apply to a different listing category from the one in which its securities are listed. 2 Listing Principles
2.1 Application and purpose
Application
2.1.1 R The Listing Principles in UKLR 2.2.1R apply to every listed company in
respect of all its obligations arising from the listing rules, disclosure requirements, transparency rules and corporate governance rules.
2.1.2 G This chapter is also relevant to applicants in relation to the confirmation
in respect of procedures, systems and controls required by UKLR 20.3.1R. [Note: The Procedures, Systems and Controls Confirmation Form can be found on the Primary Markets section of the FCA’s website.] Purpose
2.1.3 G The purpose of the Listing Principles is to ensure that listed companies
pay due regard to the fundamental role they play in maintaining market confidence and ensuring fair and orderly markets.
2.1.4 G The Listing Principles are designed to assist listed companies in
identifying their obligations and responsibilities under the listing rules, disclosure requirements, transparency rules and corporate governance rules. The Listing Principles should be interpreted together with relevant rules and guidance which underpin the Listing Principles.
2.1.5 G DEPP 6 (Penalties) and EG 7 set out guidance on the consequences of
breaching a Listing Principle.

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2.2 The Listing Principles
2.2.1 R The Listing Principles are as follows:
Listing
Principle 1
A listed company must take reasonable steps to establish and maintain adequate procedures, systems and controls to enable it to comply with its obligations. Listing Principle 2 A listed company must deal with the FCA in an open and cooperative manner. Listing Principle 3 A listed company must take reasonable steps to enable its directors to understand their responsibilities and obligations as directors. Listing Principle 4 A listed company must act with integrity towards the holders and potential holders of its listed securities. Listing Principle 5 A listed company must ensure that it treats all holders of the same class of its listed securities that are in the same position equally in respect of the rights attaching to those listed securities. Listing Principle 6 A listed company must communicate information to holders and potential holders of its listed securities in such a way as to avoid the creation or continuation of a false market in those listed securities. Guidance on the Listing Principles
2.2.2 G Listing Principle 1 is intended to ensure that listed companies have
adequate procedures, systems and controls to enable them to comply with their obligations under the listing rules, disclosure requirements, transparency rules and corporate governance rules. In particular, the FCA considers that listed companies should place particular emphasis on ensuring that they have adequate procedures, systems and controls in relation to, where applicable:
(1) identifying whether any obligations arise under UKLR 7 (Equity shares (commercial companies): significant transactions and reverse takeovers) and UKLR 8 (Equity shares (commercial companies): related party transactions); (2) the timely and accurate disclosure of information to the market; and (3) the provision of information to the FCA in accordance with UKLR 1.3.1R and to their sponsor in accordance with UKLR 4.5.1R.

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2.2.3 G For the purposes of Listing Principle 1, directors should take reasonable
steps to ensure that adequate governance arrangements are established and maintained at all times to enable the listed company to comply with Listing Principle 1.
2.2.4 G Timely and accurate disclosure of information to the market is a key
obligation of listed companies. For the purposes of Listing Principle 1, a listed company should have adequate procedures, systems and controls to be able to:
(1) ensure that it can properly identify information which requires disclosure under the listing rules, disclosure requirements, transparency rules or corporate governance rules in a timely manner; and (2) ensure that any information identified under (1) is properly considered by the directors and that such a consideration encompasses whether the information should be disclosed.
2.2.5 G For the purposes of Listing Principle 1, a listed company should have
adequate procedures, systems and controls to be able to:
(1) explain to the FCA where information is held and how it can be accessed (regardless of whether the information is held in the UK or overseas); and (2) access easily from the UK information that may be held outside the UK.
2.2.6 G For the purposes of Listing Principle 2:
(1) a listed company should take reasonable steps to ensure that its directors deal with the FCA in an open and cooperative manner; and (2) the FCA expects the directors of the listed company to deal with the FCA in an open and cooperative manner, including when responding to requests for information and attending interviews with the FCA. 3 Requirements for listing: all securities
3.1 Preliminary
Application
3.1.1 R This chapter applies to all applicants for admission to listing (unless a rule
is specified only to apply to a particular type of applicant or security). Refusal of applications

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3.1.2 G Under the Act, the FCA may not grant an application for admission unless
it is satisfied that:
(1) the requirements of the listing rules are complied with; and (2) any special requirement (see UKLR 3.1.4R) is complied with.
3.1.3 G Under the Act, the FCA may also refuse an application for admission if it
considers that:
(1) admission of the securities would be detrimental to investors’ interests; or (2) for securities already listed in a third country, the issuer has failed to comply with any obligations under that listing. Special requirements
3.1.4 R (1) The FCA may make the admission of securities subject to any
special requirement that it considers appropriate to protect investors. (2) The FCA must explicitly inform the issuer of any special requirement that it imposes. No conditional admission
3.1.5 G The FCA is not able to make the admission of securities conditional on
any event. The FCA may, in particular cases, seek confirmation from an issuer before the admission of securities that the admission does not purport to be conditional on any matter.
3.2 Requirements for all securities
Incorporation
3.2.1 R An applicant (other than a public sector issuer) must be:
(1) duly incorporated or otherwise validly established according to the relevant laws of its place of incorporation or establishment; and (2) operating in conformity with its constitution. Validity
3.2.2 R To be listed, securities must:
(1) conform with the law of the applicant’s place of incorporation; (2) be duly authorised according to the requirements of the applicant’s constitution; and

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(3) have any necessary statutory or other consents.
Admission to trading
3.2.3 R Other than in regard to securities to which UKLR 23 applies, to be listed,
equity shares must be admitted to trading on a regulated market for listed securities. All other securities must be admitted to trading on a RIE’s market for listed securities. Transferability
3.2.4 R (1) To be listed, securities must be freely transferable.
(2) To be listed, shares must be fully paid and free from all liens and from any restriction on the right of transfer (except any restriction imposed for failure to comply with a notice under section 793 of the Companies Act 2006 (Notice by company requiring information about interests in its shares)).
3.2.5 G The FCA may modify UKLR 3.2.4R to allow partly paid securities to be
listed if it is satisfied that their transferability is not restricted and investors have been provided with appropriate information to enable dealings in the securities to take place on an open and proper basis.
3.2.6 G The FCA may, in exceptional circumstances, modify or dispense with
UKLR 3.2.4R where the applicant has the power to disapprove the transfer of shares if the FCA is satisfied that this power would not disturb the market in those shares. Market capitalisation
3.2.7 R (1) The expected aggregate market value of all securities (excluding
treasury shares and shares of a closed-ended investment fund or open-ended investment company) to be listed must be at least:
(a) £30 million for shares; and
(b) £200,000 for debt securities.
(2) The expected aggregate market value of shares of a closed-ended investment fund or open-ended investment company to be listed must be at least £700,000. (3) Paragraph (1) does not apply to tap issues where the amount of the debt securities is not fixed. (4) Paragraphs (1) and (2) do not apply if securities of the same class are already listed.

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3.2.8 G The FCA may modify UKLR 3.2.7R to admit securities of a lower value if
it is satisfied that there will be an adequate market for the securities concerned. Whole class to be listed
3.2.9 R An application for listing of securities of any class must:
(1) if no securities of that class are already listed, relate to all securities of that class, issued or proposed to be issued; or (2) if securities of that class are already listed, relate to all further securities of that class, issued or proposed to be issued. Prospectus
3.2.10 R (1) This rule applies if:
(a) a prospectus must be approved and published for the securities; or (b) the applicant is permitted and elects to draw up a prospectus for the securities. (2) To be listed, a prospectus must have been approved by the FCA and published in relation to the securities. Listing particulars
3.2.11 R (1) This rule applies if, under UKLR 23, listing particulars must be
approved and published for securities.
(2) To be listed, listing particulars for the securities must have been approved by the FCA and published in accordance with UKLR 23. Convertible securities and miscellaneous securities carrying the right to buy or subscribe for other securities
3.2.12 R Convertible securities and miscellaneous securities giving the holder the
right to buy or subscribe for other securities may be admitted to listing only if the securities into which they are convertible or over which they give a right to buy or subscribe are already, or will become at the same time:
(1) listed securities; or
(2) securities listed on a regulated, regularly operating, recognised open market.

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3.2.13 G The FCA may dispense with UKLR 3.2.12R if it is satisfied that holders of
the convertible securities have at their disposal all the information necessary to form an opinion about the value of the underlying securities. 4 Sponsors: responsibilities of issuers
4.1 Application
4.1.1 R This chapter applies to all issuers with a listing of equity shares in, or
applying for admission of equity shares to, the equity shares (commercial companies) category, the closed-ended investment funds category or the equity shares (shell companies) category.
4.2 When a sponsor must be appointed or its guidance obtained
When a sponsor must be appointed
4.2.1 R An issuer with a listing of equity shares in, or applying for admission of
its equity shares to, the equity shares (commercial companies) category, the closed-ended investment funds category for the equity shares (shell companies) category must appoint a sponsor on each occasion that the issuer:
(1) is required to submit any of the following documents to the FCA in connection with an application for admission of equity shares to the equity shares (commercial companies) category, the closedended investment funds category or the equity shares (shell companies) category:
(a) a prospectus or supplementary prospectus; (b) a summary document as required by article 1(5)(j) of the Prospectus Regulation; or (c) for an issuer that is a closed-ended investment fund, listing particulars or supplementary listing particulars; (2) is required to publish a document under article 1(4)(f) or (g) or (5)(e) or (f) of the Prospectus Regulation; (3) is required to submit to the FCA a reverse takeover circular for approval; (4) is required by UKLR 11 (Closed-ended investment funds:
requirements for listing and continuing obligations) to submit to the FCA a relevant related party transaction circular for approval; (5) is required to do so by the FCA because it appears to the FCA that there is, or there may be, a breach of the listing rules, the disclosure requirements or the transparency rules by the listed issuer;

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(6) is required by UKLR 8.2.1R(3) (including as modified by UKLR 11.5.4R) to obtain a confirmation that the terms of a proposed transaction or arrangement with a related party are fair and reasonable; (7) is required by the FCA to have a sponsor submit a letter to the FCA setting out how the applicant satisfies the criteria in UKLR 3 and, if applicable, UKLR 5, UKLR 11 or UKLR 13; (8) is required to procure that a sponsor contact the FCA as specified in UKLR 13.4, including so that the sponsor provides any requested confirmation; or (9) is required to procure that a sponsor submits to the FCA a letter in relation to the issuer’s eligibility in connection with a reverse takeover under UKLR 7.5.13G(2).
4.2.2 R An issuer must appoint a sponsor where it applies to transfer its category
of listing from:
(1) a listing in the equity shares (commercial companies) category to a listing in the closed-ended investment funds category; (2) a listing in the equity shares (commercial companies) category to a listing in the equity shares (shell companies) category; (3) a listing in the closed-ended investment funds category to a listing in the equity shares (commercial companies) category; (4) a listing in the open-ended investment companies category to a listing in the equity shares (commercial companies) category; (5) a listing in the equity shares (international commercial companies secondary listing) category to a listing in the equity shares (commercial companies) category; (6) a listing in the equity shares (international commercial companies secondary listing) category to a listing in the equity shares (shell companies) category; (7) a listing in the equity shares (international commercial companies secondary listing) category to a listing in the closed-ended investment funds category; (8) a listing in the equity shares (transition) category to a listing in the equity shares (commercial companies) category; (9) a listing in the equity shares (transition) category to a listing in the equity shares (shell companies) category; or

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(10) a listing in the equity shares (transition) category to a listing in the closed-ended investment funds category.
4.2.3 R An issuer with equity shares admitted to the equity shares (commercial
companies) category or the closed-ended investment funds category must appoint a sponsor where it proposes to make a request to the FCA to modify, waive or substitute the operation of UKLR 7, UKLR 8 or UKLR 11.
4.2.4 R An issuer with a listing of equity shares in the equity shares (commercial
companies) category or the closed-ended investment funds category must appoint a sponsor where it proposes to make a request to the FCA for individual guidance in relation to the listing rules, the disclosure requirements or the transparency rules in connection with a matter referred to in UKLR 7, UKLR 8 or UKLR 11.
4.2.5 G If an issuer with a listing of equity shares in, or applying for admission of
its equity shares to, the equity shares (commercial companies) category, the closed-ended investment funds category or the equity shares (shell companies) category wishes to seek individual guidance about a matter that is, or will be, the subject of a sponsor service, the FCA expects to discuss all matters relating to a sponsor service directly with a sponsor. However, in appropriate circumstances, the FCA will communicate directly with the issuer or its advisers. Other transactions where an issuer must obtain a sponsor’s guidance
4.2.6 R If an issuer with a listing of equity shares in the equity shares
(commercial companies) category, the closed-ended investment funds category or the equity shares (shell companies) category is proposing to enter into a transaction which, due to its size or nature, could amount to a reverse takeover or an initial transaction, it must obtain the guidance of a sponsor to assess the application of the listing rules, the disclosure requirements and the transparency rules.
4.3 Notifications to FCA
4.3.1 R A listed issuer or applicant must ensure the FCA is informed promptly of
the name and contact details of any sponsor appointed in accordance with the listing rules (either by the listed issuer or applicant, or by the sponsor itself).
4.3.2 R (1) A listed issuer or applicant must notify the FCA, in writing,
immediately of the resignation or dismissal of any sponsor that it had appointed. (2) In the case of a dismissal, the reasons for the dismissal must be included in the notification. (3) The notification must be copied to the sponsor.

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4.4 Issuer appoints more than one sponsor
4.4.1 R Where a listed issuer or applicant appoints more than one sponsor to
provide a sponsor service, the listed issuer or applicant must:
(1) ensure that one sponsor takes responsibility for contact with the FCA in respect of administrative arrangements for the sponsor service; and (2) inform the FCA promptly, in writing, of the name and contact details of the sponsor taking responsibility under (1).
4.5 Cooperation with sponsors
4.5.1 R In relation to the provision of a sponsor service, an issuer with a listing of
equity shares in, or applying for admission of its equity shares to, the equity shares (commercial companies) category, the closed-ended investment funds category or the equity shares (shell companies) category must cooperate with its sponsor by providing the sponsor with all information reasonably requested by the sponsor for the purpose of carrying out the sponsor service in accordance with UKLR 24.
4.5.2 G (1) The role of a sponsor – including to provide the FCA with
assurances, explanations and confirmations relating to compliance with the listing rules by issuers with a listing of equity shares, or applying for admission of equity shares, and to provide guidance to issuers with a listing of equity shares, or applying for admission of equity shares, in understanding and meeting their responsibilities under the listing rules, disclosure requirements and transparency rules – is set out in UKLR 24.2 and UKLR 24.3. (2) The assurances, explanations and confirmations in (1) may relate to shareholder approvals obtained, or other work undertaken, by an issuer before the appointment of a sponsor in relation to a particular transaction. Therefore, an issuer with a listing of equity shares, or applying for admission of its equity shares, to the equity shares (commercial companies) category, the closed-ended investment funds category or the equity shares (shell companies) category is encouraged to engage with a sponsor at the earliest possible stage if it is in doubt about the application of the listing rules, the disclosure requirements or the transparency rules to a particular matter. 5 Equity shares (commercial companies): requirements for admission to listing
5.1 Application

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5.1.1 R This chapter applies to an applicant for the admission of equity shares
other than those of:
(1) a closed-ended investment fund;
(2) an open-ended investment company;
(3) a shell company; or
(4) an investment entity that is not a closed-ended investment fund or an open-ended investment company.
5.1.2 R This chapter applies to an applicant for the admission of equity shares to
the equity shares (commercial companies) category except where:
(1) the applicant meets the following conditions:
(a) it has an existing listing in the equity shares (commercial companies) category; (b) it is applying for the admission of equity shares of the same class as the shares that have been admitted to the equity shares (commercial companies) category; and (c) it is not entering into a transaction classified as a reverse takeover; or (2) the following conditions are met:
(a) a company has an existing listing in the equity shares (commercial companies) category; (b) the applicant is a new holding company of the company in (2)(a); and (c) the company in (2)(a) is not entering into a transaction classified as a reverse takeover.
5.2 Externally managed companies
5.2.1 R An applicant must satisfy the FCA that:
(1) the discretion of its board to make strategic decisions on behalf of the applicant has not been limited or transferred to a person outside the applicant’s group; and (2) its board has the capability to act on key strategic matters in the absence of a recommendation from a person outside the applicant’s group.
5.2.2 G In considering whether an applicant has satisfied UKLR 5.2.1R, the FCA
will consider, among other things, whether the applicant’s board consists

FCA 2024/23 solely of non-executive directors and whether significant elements of the strategic decision-making of or planning for the applicant take place outside the applicant’s group – for example, with an external management company.
5.3 Controlling shareholders
5.3.1 R An applicant with a controlling shareholder must demonstrate that,
despite having a controlling shareholder, the applicant is able to carry on the business it carries on as its main activity independently from such controlling shareholder at all times.
5.3.2 G Factors which may indicate that an applicant does not satisfy the
requirement in UKLR 5.3.1R include:
(1) an applicant has granted or may be required to grant security over its business in connection with the funding of a controlling shareholder or a member of a controlling shareholder’s group; or (2) an applicant cannot demonstrate that it has access to financing other than from a controlling shareholder (or an associate thereof).
5.3.3 R Where:
(1) an applicant is a sovereign controlled commercial company; and (2) the State which is a sovereign controlling shareholder is either:
(a) recognised by the government of the UK as a State at the time the application is made; or (b) the UK, references to a controlling shareholder must be read as excluding a sovereign controlling shareholder in, or for the purposes of, UKLR 5.3.1R to UKLR 5.3.2G.
5.4 Constitutional arrangements
5.4.1 R An applicant must have in place a constitution that allows it to comply
with the listing rules – in particular:
(1) UKLR 6.2.27R to vote on matters that must be decided by a resolution of the holders of the listed company’s equity shares that have been admitted to the equity shares (commercial companies) category; and (2) for an applicant with a controlling shareholder, UKLR 6.2.8R and UKLR 6.2.9R concerning the election and re-election of independent directors.

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5.4.2 R An applicant must have in place a constitution which ensures that all
equity shares in a class that has been admitted to the equity shares (commercial companies) category carry an equal number of votes on any shareholder vote.
5.4.3 R Where the applicant will have more than one class of equity shares
admitted to the equity shares (commercial companies) category, the aggregate voting rights of the equity shares in each class should be broadly proportionate to the relative interests of those classes in the equity of the listed company.
5.4.4 G In assessing whether the voting rights attaching to different classes of
listed equity shares are proportionate for the purposes of UKLR 5.4.3R, the FCA will have regard to the following non-exhaustive list of factors:
(1) the extent to which the rights of the classes differ other than their voting rights – for example, with regard to dividend rights or entitlement to any surplus capital on winding up; (2) the extent of dispersion and relative liquidity of the classes; and/or (3) the commercial rationale for the difference in the rights.
5.4.5 R Where the applicant will have specified weighted voting rights shares in
issue following admission, the applicant must have in place, on the first occasion the applicant makes an application for the admission of equity shares to the equity shares (commercial companies) category, a constitution which ensures that all of the following conditions are met:
(1) The specified weighted voting rights shares may only be issued to a person who, on the first occasion the applicant makes an application for the admission of equity shares to the equity shares (commercial companies) category, was:
(a) a director of the applicant;
(b) an investor in, or shareholder of, the applicant; (c) an employee of the applicant; (d) a person established for the sole benefit of, or solely owned and controlled by, a person specified in (a), (b) or (c); or (e) where the applicant is a sovereign controlled commercial company, a sovereign controlling shareholder. (2) (a) The voting rights attached to the specified weighted voting rights shares issued to a person specified in (b) in accordance with (1) may only count towards shareholder votes for a period of 10 years beginning with the date on

FCA 2024/23 which the issuer first had a class of shares admitted to listing. (b) A person specified for the purposes of (a) is an investor in, or shareholder of, the applicant which is not a natural person, except for:
(i) a person established for the sole benefit of, or solely owned and controlled by, a person who is a natural person; and (ii) a sovereign controlling shareholder. (3) The voting rights attached to specified weighted voting rights shares issued in accordance with (1) may not be transferred except to a person established for the sole benefit of, or solely owned and controlled by, a person specified in (1)(a), (b) or (c) to whom such specified weighted voting rights shares were issued. (4) The holders of the specified weighted voting rights shares cannot exercise the voting rights attached to specified weighted voting rights shares on the shareholder votes referred to in UKLR 6.2.27R(1).
5.4.6 G UKLR 5.4.5R(1)(d) and UKLR 5.4.5R(3) are intended to enable specified
weighted voting rights shares to be held or transferred for the purpose of obtaining or maintaining favourable treatment of the specified weighted voting rights shares, including to take account of local tax, exchange control or securities laws in overseas territories. Pre-emption rights
5.4.7 R If the law of the country of its incorporation does not confer on
shareholders rights which are at least equivalent to UKLR 9.2.1R, an overseas company applying for a listing in the equity shares (commercial companies) category must:
(1) ensure that its constitution provides for rights which are at least equivalent to the rights provided in UKLR 9.2.1R (as qualified by UKLR 9.2.2R); and (2) be satisfied that conferring such rights would not be incompatible with the law of the country of its incorporation.
5.5 Shares in public hands
5.5.1 R Where an applicant is applying for the admission of a class of equity
shares to listing in the equity shares (commercial companies) category, a sufficient number of shares of that class must, no later than the time of admission, be distributed to the public.

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5.5.2 R For the purposes of UKLR 5.5.1R:
(1) a sufficient number of shares will be taken to have been distributed to the public when 10% of the shares for which application for admission has been made are in public hands; and (2) treasury shares are not to be taken into consideration when calculating the number of shares of the class.
5.5.3 R For the purposes of UKLR 5.5.1R and UKLR 5.5.2R, shares are not held
in public hands if they are:
(1) held, directly or indirectly, by:
(a) a director of the applicant or of any of its subsidiary undertakings; (b) a person connected with a director of the applicant or of any of its subsidiary undertakings; (c) the trustees of any employees’ share scheme or pension fund established for the benefit of any directors and employees of the applicant and its subsidiary undertakings; (d) any person who, under any agreement, has a right to nominate a person to the board of directors of the applicant; or (e) any person or persons in the same group or persons acting in concert who have an interest in 5% or more of the shares of the relevant class; or (2) subject to a lock-up period of more than 180 calendar days.
5.5.4 G When calculating the number of shares for the purposes of UKLR
5.5.3R(1)(e), holdings of investment managers in the same group will be disregarded where:
(1) investment decisions are made independently by the individual in control of the relevant fund; and (2) those decisions are unfettered by the group to which the investment manager belongs.
5.6 Shares of a third country company
5.6.1 R The FCA will not admit shares of an applicant incorporated in a third
country that are not listed either in its country of incorporation or in the country in which a majority of its shares are held, unless the FCA is satisfied that the absence of the listing is not due to the need to protect investors.

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6 Equity shares (commercial companies): continuing obligations
6.1 Preliminary
Application
6.1.1 R This chapter applies to a company that has a listing of equity shares in the
equity shares (commercial companies) category.
6.2 Requirements with continuing application
Admission to trading
6.2.1 R A listed company must comply with UKLR 3.2.3R at all times.
6.2.2 R A listed company must inform the FCA in writing as soon as possible if it
has:
(1) requested a RIE to admit or re-admit any of its listed equity shares to trading; (2) requested a RIE to cancel or suspend trading of any of its listed equity shares; or (3) been informed by a RIE that trading of any of its listed equity shares will be cancelled or suspended. Controlling shareholders
6.2.3 R A listed company with a controlling shareholder must be able to carry on
the business it carries on as its main activity independently from such controlling shareholder at all times.
6.2.4 G UKLR 5.3.2G provides guidance on factors that may indicate that a listed
company with a controlling shareholder is not carrying on the business it carries on as its main activity independently from a controlling shareholder.
6.2.5 R Where a listed company has a controlling shareholder, it must have in
place at all times a constitution that allows the election and re-election of independent directors to be conducted in accordance with UKLR 6.2.8R and UKLR 6.2.9R.
6.2.6 R (1) This rule applies where a person becomes a controlling
shareholder of a listed company which did not previously have a controlling shareholder, as a result of changes in ownership or control of the listed company. (2) Where this rule applies, the listed company has until the date of the next annual general meeting of the listed company, other than an annual general meeting for which notice:

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(a) has already been given; or
(b) is given within a period of 3 months from the event that resulted in that person becoming a controlling shareholder, to comply with UKLR 6.2.5R.
6.2.7 G In complying with UKLR 6.2.5R, a listed company may allow an existing
independent director who is being proposed for re-election (including any such director who was appointed by the board of the listed company until the next annual general meeting) to remain in office until any resolution required by UKLR 6.2.9R has been voted on.
6.2.8 R Where UKLR 6.2.5R applies, the election or re-election of any
independent director by shareholders must be approved by:
(1) the shareholders of the listed company; and (2) the independent shareholders of the listed company.
6.2.9 R Where UKLR 6.2.8R applies, if the election or re-election of an
independent director is not approved by both the shareholders and the independent shareholders of the listed company, but the listed company wishes to propose that person for election or re-election as an independent director, the listed company must propose a further resolution to elect or re-elect the proposed independent director which:
(1) must not be voted on within a period of 90 days from the date of the original vote; (2) must be voted on within a period of 30 days from the end of the period set out in (1); and (3) must be approved by the shareholders of the listed company. Statements by directors in relation to a shareholder resolution
6.2.10 R Where:
(1) a listed company has a controlling shareholder; and (2) the controlling shareholder or any of its associates proposes or procures the proposal of a shareholder resolution which a director considers is intended or appears to be intended to circumvent the proper application of the listing rules, the circular accompanying the notice of meeting which contains the relevant shareholder resolution must set out a statement by the board of the director’s opinion in respect of the resolution.

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Compliance with the disclosure requirements, transparency rules and corporate governance rules
6.2.11 G A listed company whose equity shares are admitted to trading on a
regulated market should consider its obligations under the disclosure requirements.
6.2.12 R A listed company that is not already required to comply with the
obligations referred to under article 17 of the Market Abuse Regulation must comply with those obligations as if it were an issuer for the purposes of the disclosure requirements and transparency rules subject to article 22 of the Market Abuse Regulation.
6.2.13 G A listed company whose equity shares are admitted to trading on a
regulated market should consider its obligations under DTR 4 (Periodic Financial Reporting), DTR 5 (Vote Holder and Issuer Notification Rules), DTR 6 (Continuing obligations and access to information) and DTR 7 (Corporate governance).
6.2.14 R A listed company that is not already required to comply with the
transparency rules must comply with DTR 4, DTR 5 and DTR 6 as if it were an issuer for the purposes of the transparency rules. Disclosure of rights attached to equity shares
6.2.15 R Unless exempted in UKLR 6.2.18R, a listed company must:
(1) forward to the FCA for publication a copy of one or more of the following:
(a) the approved prospectus or listing particulars for its listed equity shares; (b) the relevant agreement or document setting out the terms and conditions on which its listed equity shares were issued; or (c) a document describing:
(i) the rights attached to its listed equity shares; (ii) limitations on such rights; and (iii) the procedure for the exercise of such rights, produced in accordance with the relevant Annex of the Prospectus Regulation that would have applied had the listed company been required to produce a prospectus for those listed equity shares; and (2) if the information in relation to the rights attached to its listed equity shares set out in the document previously forwarded in

FCA 2024/23 accordance with (1) is no longer accurate, forward to the FCA for publication a copy of either of the following:
(a) a new document in accordance with (1); or (b) a document describing or setting out the changes which have occurred in relation to the rights attached to the listed company’s listed equity shares.
6.2.16 R The documents in UKLR 6.2.15R must be forwarded to the FCA for
publication by uploading them to the national storage mechanism.
6.2.17 G The purpose of UKLR 6.2.15R is to require listed companies to maintain
publicly available information in relation to the rights attached to their listed equity shares so that investors can access such information.
6.2.18 R A listed company is exempt from UKLR 6.2.15R where:
(1) it has previously forwarded to the FCA for publication, or otherwise filed with the FCA, a document specified in UKLR 6.2.15R(1); (2) if the information in relation to the rights attached to its listed equity shares set out in the document previously forwarded or filed in accordance with (1) is no longer accurate, it has forwarded to the FCA for publication, or otherwise filed with the FCA, a copy of either of the following:
(a) one of the documents specified in UKLR 6.2.15R(1); or (b) a document describing or setting out the changes which have occurred in relation to the rights attached to the listed company’s listed equity shares; and (3) the documents in (1) and (2) have been forwarded to the FCA for publication, or otherwise filed with the FCA, by:
(a) forwarding them for publication on a location previously identified on the FCA website where the public can inspect documents referred to in the listing rules as being documents to be made available at the document viewing facility; or (b) uploading them to the national storage mechanism. First point of contact details
6.2.19 R A listed company must ensure that the FCA is provided with up-to-date
contact details of at least one appropriate person nominated by it to act as the first point of contact with the FCA in relation to the company’s

FCA 2024/23 compliance with the listing rules, the disclosure requirements and the transparency rules.
6.2.20 G The contact person referred to in UKLR 6.2.19R will be expected to be:
(1) knowledgeable about the listed company and the listing rules applicable to it; (2) capable of ensuring that appropriate action is taken on a timely basis; and (3) contactable on business days between the hours of 7am and 7pm. Sponsors
6.2.21 G A listed company should consider its notification obligations under UKLR
4.3.
Shares in public hands
6.2.22 R A listed company must comply with UKLR 5.5.1R to UKLR 5.5.3R at all
times.
Publication of unaudited financial information
6.2.23 R (1) This rule applies to a listed company that has published:
(a) any unaudited financial information in a reverse takeover circular or a prospectus; or (b) any profit forecast or profit estimate. (2) The first time a listed company publishes financial information as required by DTR 4.1 after the publication of the unaudited financial information, profit forecast or profit estimate, it must:
(a) reproduce that financial information, profit forecast or profit estimate in its next annual report and accounts; (b) produce and disclose in the annual report and accounts the actual figures for the same period covered by the information reproduced under paragraph (2)(a); and (c) provide an explanation of the difference, if there is a difference of 10% or more between the figures required by paragraph (2)(b) and those reproduced under paragraph (2)(a).
6.2.24 G UKLR 6.2.23R does not apply to:
(1) pro forma financial information prepared in accordance with
Annex 1 and Annex 2 of the PR Regulation; or

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(2) any preliminary statements of annual results or half-yearly or quarterly reports that are reproduced with the unaudited financial information. Externally managed companies
6.2.25 R An issuer must at all times ensure that the discretion of its board to make
strategic decisions on behalf of the company has not been limited or transferred to a person outside the issuer’s group, and that the board has the capability to act on key strategic matters in the absence of a recommendation from a person outside the issuer’s group. Equal voting rights within a listed class
6.2.26 R A listed company must at all times maintain constitutional arrangements
that comply with UKLR 5.4.2R.
Voting on matters relevant to listing in the equity shares (commercial companies) category
6.2.27 R (1) Where the provisions of UKLR 9, UKLR 21.2 or UKLR 21.5
require a shareholder vote to be taken, that vote must be decided by a resolution of the holders of the listed company’s equity shares that have been admitted to the equity shares (commercial companies) category. (2) Where the provisions of UKLR 6.2.8R, UKLR 21.2.8R or UKLR 21.5.6R(3)(b)(ii) require that the resolution must in addition be approved by independent shareholders, only independent shareholders who hold the listed company’s equity shares that have been admitted to the equity shares (commercial companies) category can vote.
6.2.28 G The FCA may modify the operation of UKLR 6.2.27R in exceptional
circumstances – for example, to accommodate the operation of:
(1) special share arrangements designed to protect the national interest; (2) dual-listed company voting arrangements; and (3) voting rights attaching to preference shares or similar securities that are in arrears. Listed companies with more than one class admitted
6.2.29 R Where a listed company has more than one class of equity shares admitted
to the equity shares (commercial companies) category, the aggregate voting rights of the equity shares in each class should be broadly proportionate to the relative interests of those classes in the equity of the listed company.

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6.2.30 G In assessing whether the voting rights attaching to different classes of
listed equity shares are proportionate for the purposes of UKLR 6.2.29R, the FCA will have regard to the following non-exhaustive list of factors:
(1) the extent to which the rights of the classes differ other than their voting rights – for example, with regard to dividend rights or entitlement to any surplus capital on winding up; (2) the extent of dispersion and relative liquidity of the classes; and/or (3) the commercial rationale for the difference in the rights. Listed companies with specified weighted voting rights shares in issue
6.2.31 R For so long as a listed company has specified weighted voting rights
shares in issue, the listed company must at all times maintain constitutional arrangements that comply with UKLR 5.4.5R.
6.2.32 G The effect of UKLR 5.4.5R(4) and UKLR 6.2.27R(1) is that the voting
rights attached to specified weighting voting rights shares may not count towards the shareholder votes referred to in UKLR 6.2.27R(1).
6.2.33 G The FCA may modify the operation of UKLR 6.2.31R in exceptional
circumstances – for example, to accommodate the operation of:
(1) special share arrangements designed to protect the national interest; (2) dual-listed company voting arrangements; and (3) voting rights attaching to preference shares or similar securities that are in arrears. Sovereign controlled commercial companies
6.2.34 R (1) Where:
(a) a listed company is a sovereign controlled commercial company and:
(i) has a sovereign controlling shareholder which was a controlling shareholder on the first occasion on which the company made an application for the admission of equity shares to the equity shares (commercial companies) category; (ii) has made a notification in accordance with UKLR 6.4.18R and UKLR 6.4.19R; or (iii) made an announcement in accordance with UKLR 21.5.7.R(2) and UKLR 21.5.10R when it transferred

FCA 2024/23 the listing of its equity shares to the equity shares (commercial companies) category; and (b) the sovereign controlling shareholder is either:
(i) recognised by the government of the UK as a State; or (ii) the UK, references to controlling shareholder must be read as excluding a sovereign controlling shareholder in, or for the purposes of, the provisions set out in (2). (2) The provisions referred to in (1) are:
(a) UKLR 6.2.3R; and
(b) UKLR 6.2.4G.
Notifications to the FCA: notifications regarding continuing obligations
6.2.35 R A listed company must notify the FCA without delay if it does not comply
with any continuing obligation set out in UKLR 6.2.3R, UKLR 6.2.5R, UKLR 6.2.8R, UKLR 6.2.9R, UKLR 6.2.22R, UKLR 6.2.26R, UKLR 6.2.27R, UKLR 6.2.29R or UKLR 6.2.31R. Notifications to the FCA: notifications regarding UKLR 6.6.2R
6.2.36 R A listed company must notify the FCA without delay if its annual
financial report contains a statement of the kind specified under UKLR 6.6.2R. Inability to comply with continuing obligations
6.2.37 G Where a listed company is unable to comply with a continuing obligation
set out in UKLR 6.2, it should consider seeking a cancellation of listing or applying for a transfer of its listing category. In particular, the listed company should note UKLR 21.2.2G(2) and UKLR 21.5.18G.
6.3 Continuing obligations: holders
Proxy forms
6.3.1 R A listed company must ensure that, in addition to its obligations under the
Companies Act 2006, a proxy form:
(1) provides for at least 3-way voting on all resolutions intended to be proposed (except that it is not necessary to provide proxy forms with 3-way voting on procedural resolutions); and

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(2) states that if it is returned without an indication as to how the proxy shall vote on any particular matter, the proxy will exercise their discretion as to whether, and if so how, they vote. Proxy forms for re-election of retiring directors
6.3.2 R If the resolutions to be proposed include the re-election of retiring
directors and the number of retiring directors standing for re-election exceeds 5, the proxy form may give shareholders the opportunity to vote for or against (or abstain from voting on) the re-election of the retiring directors as a whole but must also allow votes to be cast for or against (or for shareholders to abstain from voting on) the re-election of the retiring directors individually. Sanctions
6.3.3 R Where a listed company has taken a power in its constitution to impose
sanctions on a shareholder who is in default in complying with a notice served under section 793 of the Companies Act 2006 (Notice by company requiring information about interests in its shares):
(1) sanctions may not take effect earlier than 14 days after service of the notice; (2) for a shareholding of less than 0.25% of the shares of a particular class (calculated exclusive of treasury shares), the only sanction that the constitution may provide for is a prohibition against attending meetings and voting; (3) for a shareholding of 0.25% or more of the shares of a particular class (calculated exclusive of treasury shares), the constitution may provide:
(a) for a prohibition against attending meetings and voting; (b) for the withholding of the payment of dividends (including shares issued in lieu of dividend) on the shares concerned; and (c) for the placing of restrictions on the transfer of shares, provided that restrictions on transfer do not apply to a sale to a genuine unconnected third party (such as through a RIE or an overseas exchange or by the acceptance of a takeover offer); and (4) any sanctions imposed in accordance with paragraph (2) or (3) above must cease to apply after a specified period of not more than 7 days after the earlier of:
(a) receipt by the issuer of notice that the shareholding has been sold to an unconnected third party through a RIE or an

FCA 2024/23 overseas exchange or by the acceptance of a takeover offer; and (b) due compliance, to the satisfaction of the issuer, with the notice under section 793.
6.3.4 G An overseas company with a listing in the equity shares (commercial
companies) category is not required to comply with UKLR 6.3.3R.
6.4 Notifications
Copies of documents
6.4.1 R A listed company must forward to the FCA for publication a copy of all
circulars, notices, reports or other documents to which the listing rules apply at the same time as they are issued, by uploading it to the national storage mechanism.
6.4.2 R A listed company must forward to the FCA for publication a copy of all
resolutions passed by the listed company other than resolutions concerning ordinary business at an annual general meeting as soon as possible after the relevant general meeting, by uploading it to the national storage mechanism.
6.4.3 R (1) A listed company must notify a RIS as soon as possible when a
document has been forwarded to the FCA under UKLR 6.4.1R or UKLR 6.4.2R unless the full text of the document is provided to the RIS. (2) A notification made under paragraph (1) must set out where copies of the relevant document can be obtained. Notifications relating to capital
6.4.4 R A listed company must notify a RIS as soon as possible (unless otherwise
indicated in this rule) of the following information relating to its capital:
(1) any proposed change in its capital structure, including the structure of its listed debt securities, save that an announcement of a new issue may be delayed while marketing or underwriting is in progress; (2) any redemption of listed shares, including details of the number of shares redeemed and the number of shares of that class outstanding following the redemption; (3) any extension of time granted for the currency of temporary documents of title; and

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(4) (except in relation to a block listing of securities) the results of any new issue of equity securities or a public offering of existing equity securities.
6.4.5 R Where the securities are subject to an underwriting agreement, a listed
company may, at its discretion and subject to the obligations in article 17 of the Market Abuse Regulation, delay notifying a RIS as required by UKLR 6.4.4R(4) for up to 2 business days until the obligation by the underwriter to take or procure others to take securities is finally determined or lapses. In the case of an issue or offer of securities which is not underwritten, notification of the result must be made as soon as it is known. Notification of board changes and directors’ details
6.4.6 R A listed company must notify a RIS of any change to the board, including:
(1) the appointment of a new director, stating the appointee’s name and whether the position is executive, non-executive or chair and the nature of any specific function or responsibility of the position; (2) the resignation, removal or retirement of a director (unless the director retires by rotation and is re-appointed at a general meeting of the listed company’s shareholders); (3) important changes to the role, functions or responsibilities of a director; and (4) the effective date of the change if it is not with immediate effect, as soon as possible and, in any event, by the end of the business day following the decision or receipt of notice about the change by the company.
6.4.7 R If the effective date of the board change is not yet known, the notification
required by UKLR 6.4.6R should state this fact and the listed company should notify a RIS as soon as the effective date has been decided.
6.4.8 R A listed company must notify a RIS of the following information in
respect of any new director appointed to the board as soon as possible following the decision to appoint the director and, in any event, within 5 business days of the decision:
(1) details of all directorships held by the director in any other publicly quoted company at any time in the previous 5 years, indicating whether or not they are still a director; (2) any unspent convictions in relation to indictable offences; (3) details of any receiverships, compulsory liquidations, creditors’ voluntary liquidations, administrations, company voluntary

FCA 2024/23 arrangements or any composition or arrangement with its creditors generally or any class of its creditors of any company where the director was an executive director at the time of, or within the 12 months preceding, such events; (4) details of any compulsory liquidations, administrations or partnership voluntary arrangements of any partnerships where the director was a partner at the time of, or within the 12 months preceding, such events; (5) details of receiverships of any asset of such person or of a partnership of which the director was a partner at the time of, or within the 12 months preceding, such event; and (6) details of any public criticisms of the director by statutory or regulatory authorities (including designated professional bodies) and whether the director has ever been disqualified by a court from acting as a director of a company or from acting in the management or conduct of the affairs of any company.
6.4.9 R A listed company must, in respect of any current director, notify a RIS as
soon as possible of:
(1) any changes in the information set out in UKLR 6.4.8R(2) to UKLR 6.4.8R(6); and (2) any new directorships held by the director in any other publicly quoted company.
6.4.10 G If no information is required to be disclosed pursuant to UKLR 6.4.8R, the
notification required by UKLR 6.4.8R should state this fact.
Notification of lock-up arrangements
6.4.11 R A listed company must notify a RIS as soon as possible of information
relating to the disposal of equity shares under an exemption allowed in the lock-up arrangements disclosed in accordance with the PR Regulation.
6.4.12 R A listed company must notify a RIS as soon as possible of the details of
any variation in the lock-up arrangements disclosed in accordance with the PR Regulation or any subsequent announcement. Notification of shareholder resolutions
6.4.13 R A listed company must notify a RIS as soon as possible after a general
meeting of all resolutions passed by the company other than resolutions concerning ordinary business passed at an annual general meeting. Change of name
6.4.14 R A listed company which changes its name must, as soon as possible:

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(1) notify a RIS of the change, stating the date on which it has taken effect; (2) inform the FCA in writing of the change; and (3) where the listed company is incorporated in the United Kingdom, send the FCA a copy of the revised certificate of incorporation issued by the Registrar of Companies. Change of accounting date
6.4.15 R A listed company must notify a RIS as soon as possible of:
(1) any change in its accounting reference date; and (2) the new accounting reference date.
6.4.16 R A listed company must prepare and publish a second interim report in
accordance with DTR 4.2 if the effect of the change in the accounting reference date is to extend the accounting period to more than 14 months.
6.4.17 G The second interim report must be prepared and published in respect of
either:
(1) the period up to the old accounting reference date; or (2) the period up to a date not more than 6 months prior to the new accounting reference date. Sovereign controlling shareholder
6.4.18 R (1) Where, as a result of changes in ownership or control of a listed
company:
(a) a person becomes a sovereign controlling shareholder of the listed company; and (b) the sovereign controlling shareholder is either:
(i) recognised by the government of the UK as a State; or (ii) the UK, the listed company must comply with (2). (2) In the circumstances set out in (1), the listed company must:
(a) notify a RIS as soon as possible after it becomes aware that it has become a sovereign controlled commercial company; and

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(b) notify the FCA as soon as possible, in writing, that it has become a sovereign controlled commercial company.
6.4.19 R A notification made under UKLR 6.4.18R must include:
(1) the identity of the sovereign controlling shareholder; (2) the date on which the listed company became a sovereign controlled commercial company; and (3) an explanation of the requirements in the listing rules which will not apply to the listed company while it is a sovereign controlled commercial company.
6.4.20 R Where, as a result of changes in ownership or control of a listed company,
the listed company ceases to be a sovereign controlled commercial company, the listed company must:
(1) notify a RIS as soon as possible after it becomes aware that it has ceased to be a sovereign controlled commercial company; and (2) notify the FCA as soon as possible, in writing, that it has ceased to be a sovereign controlled commercial company.
6.4.21 R A notification made under UKLR 6.4.20R must include:
(1) the identity of the person which had been the sovereign controlling shareholder; (2) the date on which the listed company ceased to be a sovereign controlled commercial company; and (3) an explanation of the requirements in the listing rules which did not apply to the listed company while it was a sovereign controlled commercial company but will apply to the listed company as it has ceased to be a sovereign controlled commercial company.
6.5 Preliminary statement of annual results, and statement of dividends
Preliminary statement of annual results
6.5.1 R If a listed company prepares a preliminary statement of annual results:
(1) the statement must be published as soon as possible after it has been approved by the board; (2) the statement must be agreed with the company’s auditors prior to publication; (3) the statement must show the figures in the form of a table, including the items required for a half-yearly report, consistent

FCA 2024/23 with the presentation to be adopted in the annual accounts for that financial year; (4) the statement must give details of the nature of any likely modification or emphasis-of-matter paragraph that may be contained in the auditors’ report required to be included with the annual financial report; and (5) the statement must include any significant additional information necessary for the purpose of assessing the results being announced. Statement of dividends
6.5.2 R A listed company must notify a RIS as soon as possible after the board has
approved any decision to pay or make any dividend or other distribution on listed equity shares or to withhold any dividend or interest payment on listed securities, giving details of:
(1) the exact net amount payable per share; (2) the payment date; (3) the record date (where applicable); and (4) any foreign income dividend election, together with any income tax treated as paid at the lower rate and not repayable. Omission of information
6.5.3 G The FCA may authorise the omission of information required by UKLR
6.5.1R or UKLR 6.5.2R if it considers that disclosure of such information would be contrary to the public interest or seriously detrimental to the listed company, provided that such omission would not be likely to mislead the public with regard to facts and circumstances, knowledge of which is essential for the assessment of the shares.
6.6 Annual financial report
Information to be included in annual report and accounts
6.6.1 R In addition to the requirements set out in DTR 4.1, a listed company must
include in its annual financial report, where applicable, the following:
(1) a statement of the amount of interest capitalised by the group during the period under review, with an indication of the amount and treatment of any related tax relief; (2) any information required by UKLR 6.2.23R (Publication of unaudited financial information);

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(3) details of any long-term incentive schemes as required by UKLR 9.3.3R; (4) details of any arrangements under which a director of the company has waived or agreed to waive any emoluments from the company or any subsidiary undertaking; (5) where a director has agreed to waive future emoluments, details of such waiver, together with those relating to emoluments which were waived during the period under review; (6) in the case of any allotment for cash of equity securities made during the period under review otherwise than to the holders of the company’s equity shares in proportion to their holdings of such equity shares and which has not been specifically authorised by the company’s shareholders:
(a) the classes of equity securities allotted and, for each class of equity securities, the number allotted, their aggregate nominal value and the consideration received by the company for the allotment; (b) the names of the allottees, if fewer than 6 in number, and in the case of 6 or more allottees a brief generic description of each new class of equity holder (eg, holder of loan stock); (c) the market price of the allotted securities on the date on which the terms of the issue were fixed; and (d) the date on which the terms of the issue were fixed; (7) the information required by paragraph (6) must be given for any unlisted major subsidiary undertaking of the company; (8) where a listed company has listed shares in issue and is a subsidiary undertaking of another company, details of the participation by the parent undertaking in any placing made during the period under review; (9) details of any contract of significance subsisting during the period under review:
(a) to which the listed company, or one of its subsidiary undertakings, is a party and in which a director of the listed company is or was materially interested; and (b) between the listed company, or one of its subsidiary undertakings, and a controlling shareholder;

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(10) details of any contract for the provision of services to the listed company or any of its subsidiary undertakings by a controlling shareholder, subsisting during the period under review, unless:
(a) it is a contract for the provision of services which it is the principal business of the shareholder to provide; and (b) it is not a contract of significance; (11) details of any arrangement under which a shareholder has waived or agreed to waive any dividends; (12) where a shareholder has agreed to waive future dividends, details of such waiver, together with those relating to dividends which are payable during the period under review; and (13) (a) a statement made by the board that the company continues to comply with the requirement in UKLR 6.2.3R; or (b) where the company has ceased to comply with the requirement in UKLR 6.2.3R:
(i) a statement that the FCA has been notified of that non-compliance in accordance with UKLR 6.2.35R; and (ii) a brief description of the background to and reasons for that non-compliance.
6.6.2 R Where an independent director declines to support a statement made
under UKLR 6.6.1.R(13)(a), the statement must record this fact.
6.6.3 G Where a listed company’s annual financial report contains a statement of
the type referred to in UKLR 6.6.1R(13)(b), the FCA may still take any action it considers necessary in relation to the underlying breach by the listed company of UKLR 6.2.3R.
6.6.4 R The listed company’s annual financial report must include the information
required under UKLR 6.6.1R in a single identifiable section, unless the annual financial report includes a cross-reference table indicating where that information is set out.
6.6.5 G A listed company need not include with the annual report and accounts
details of waivers of dividends of less than 1% of the total value of any dividend provided that some payment has been made on each share of the relevant class during the relevant calendar year. Additional information
6.6.6 R In the case of a listed company incorporated in the United Kingdom, the
following additional items must be included in its annual financial report:

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(1) a statement setting out all the interests (in respect of which transactions are notifiable to the listed company under article 19 of the Market Abuse Regulation) of each person who is a director of the listed company as at the end of the period under review, including:
(a) all changes in the interests of each director that have occurred between the end of the period under review and a date not more than one month prior to the date of the notice of the annual general meeting; or (b) if there have been no changes in the period described in paragraph (a), a statement that there have been no changes in the interests of each director. ‘The interests of each director’ includes the interests of connected persons of which the listed company is, or ought upon reasonable enquiry to become, aware. (2) a statement showing the interests disclosed to the listed company in accordance with DTR 5 as at the end of the period under review and:
(a) all interests disclosed to the listed company in accordance with DTR 5 that have occurred between the end of the period under review and a date not more than one month prior to the date of the notice of the annual general meeting; or (b) if no interests have been disclosed to the listed company in accordance with DTR 5 in the period described in (a), a statement that no changes have been disclosed to the listed company. (3) statements by the directors on:
(a) the appropriateness of adopting the going concern basis of accounting (containing the information set out in Provision 30 of the UK Corporate Governance Code); and (b) their assessment of the prospects of the company (containing the information set out in Provision 31 of the UK Corporate Governance Code), prepared in accordance with the ‘Guidance on Risk Management, Internal Control and Related Financial and Business Reporting’ published by the Financial Reporting Council in September 2014; (4) a statement setting out:

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(a) details of any shareholders’ authority for the purchase, by the listed company, of its own shares that is still valid at the end of the period under review; (b) in the case of purchases made otherwise than through the market or by tender to all shareholders, the names of sellers of such shares purchased, or proposed to be purchased, by the listed company during the period under review; (c) in the case of any purchases made otherwise than through the market or by tender or partial offer to all shareholders, or options or contracts to make such purchases, entered into since the end of the period covered by the report, information equivalent to that required under Part 2 of
Schedule 7 to the Large & Medium Sized Companies and
Groups (Accounts and Reports) Regulations 2008 (SI 2008/410) (Disclosure required by company acquiring its own shares etc.); and (d) in the case of sales of treasury shares for cash made otherwise than through the market, or in connection with an employees’ share scheme, or otherwise than pursuant to an opportunity which (so far as was practicable) was made available to all holders of the listed company’s securities (or to all holders of a relevant class of its securities) on the same terms, particulars of the names of purchasers of such shares sold, or proposed to be sold, by the company during the period under review; (5) a statement of how the listed company has applied the Principles set out in the UK Corporate Governance Code, in a manner that would enable shareholders to evaluate how the principles have been applied; (6) a statement as to whether the listed company has:
(a) complied throughout the accounting period with all relevant provisions set out in the UK Corporate Governance Code; or (b) not complied throughout the accounting period with all relevant provisions set out in the UK Corporate Governance Code and, if so, setting out:
(i) those provisions it has not complied with; (ii) in the case of provisions whose requirements are of a continuing nature, the period within which, if any, it did not comply with some or all of those provisions; and

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(iii) the company’s reasons for non-compliance; (7) a statement setting out details of the unexpired term of any director’s service contract of a director proposed for election or re-election at the forthcoming annual general meeting, and, if any director proposed for election or re-election does not have a directors’ service contract, a statement to that effect; (8) a statement setting out:
(a) whether the listed company has included in its annual financial report climate-related financial disclosures consistent with the TCFD Recommendations and Recommended Disclosures; (b) in cases where the listed company has:
(i) made climate-related financial disclosures consistent with the TCFD Recommendations and Recommended Disclosures, but has included some or all of these disclosures in a document other than the annual financial report:
(A) the recommendations and/or recommended disclosures for which it has included disclosures in that other document; (B) a description of that document and where it can be found; and (C) the reasons for including the relevant disclosures in that document and not in the annual financial report; (ii) not included climate-related financial disclosures consistent with all of the TCFD Recommendations and Recommended Disclosures in either its annual financial report or other document as referred to in (i):
(A) the recommendations and/or recommended disclosures for which it has not included such disclosures; (B) the reasons for not including such disclosures; and (C) any steps it is taking or plans to take in order to be able to make those disclosures in the future, and the timeframe within which it

FCA 2024/23 expects to be able to make those disclosures; and (c) where in its annual financial report or (where appropriate) other document the climate-related financial disclosures referred to in (a) can be found; (9) a statement setting out:
(a) whether the listed company has met the following targets on board diversity as at a chosen reference date within its accounting period:
(i) at least 40% of the individuals on its board of directors are women; (ii) at least one of the following senior positions on its board of directors is held by a woman:
(A) the chair;
(B) the chief executive;
(C) the senior independent director; or
(D) the chief financial officer; and
(iii) at least one individual on its board of directors is from a minority ethnic background; (b) in cases where the listed company has not met all of the targets in (a):
(i) the targets it has not met; and
(ii) the reasons for not meeting those targets; (c) the reference date used for the purposes of (a) and, where this is different from the reference date used for the purposes of reporting this information in respect of the previous accounting period, an explanation as to why; and (d) any changes to the board that have occurred between the reference date used for the purposes of (a) and the date on which the annual financial report is approved that have affected the listed company’s ability to meet one or more of the targets in (a); (10) subject to UKLR 6.6.13R, numerical data on the ethnic background and the gender identity or sex of the individuals on the listed company’s board and in its executive management as at the reference date used for the purposes of UKLR 6.6.6R(9)(a), which

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Annex 1 and contain the information prescribed by those tables;
and
(11) an explanation of the listed company’s approach to collecting the data used for the purposes of making the disclosures in UKLR 6.6.6R(9).
6.6.7 G (1) The effect of UKLR 6.6.6R(1) is that a listed company is required
to set out a ‘snapshot’ of the total interests of a director and their connected persons, as at the end of the period under review (including certain information to update it as at a date not more than a month before the date of the notice of the annual general meeting). The interests that need to be set out are limited to those in respect of which transactions fall to be notified under the notification requirement for persons discharging managerial responsibilities in article 19 of the Market Abuse Regulation. Persons who are directors during, but not at the end of, the period under review need not be included. (2) A listed company unable to compile the statement in UKLR 6.6.6R(1) from information already available to it may need to seek the relevant information, or confirmation, from the director themselves, including that in relation to connected persons, but would not be expected to obtain information directly from connected persons.
6.6.8 G For the purposes of UKLR 6.6.6R(8), in determining whether climaterelated financial disclosures are consistent with the TCFD
Recommendations and Recommended Disclosures, a listed company should undertake a detailed assessment of those disclosures which takes into account:
(1) Section C of the TCFD Annex entitled ‘Guidance for All Sectors’; (2) (where appropriate) Section D of the TCFD Annex entitled ‘Supplemental Guidance for the Financial Sector’; and (3) (where appropriate) Section E of the TCFD Annex entitled ‘Supplemental Guidance for Non-Financial Groups’.
6.6.9 G For the purposes of UKLR 6.6.6R(8), in determining whether a listed
company’s climate-related financial disclosures are consistent with the TCFD Recommendations and Recommended Disclosures, the FCA considers that the following documents are relevant:
(1) the TCFD Final Report and the TCFD Annex, to the extent not already referred to in UKLR 6.6.6R(8) and UKLR 6.6.8G; (2) the TCFD Technical Supplement on the Use of Scenario Analysis;

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(3) the TCFD Guidance on Risk Management Integration and Disclosure; (4) (where appropriate) the TCFD Guidance on Scenario Analysis for Non-Financial Companies; and (5) the TCFD Guidance on Metrics, Targets and Transition Plans.
6.6.10 G For the purposes of UKLR 6.6.6R(8), in determining whether climaterelated financial disclosures are consistent with the TCFD
Recommendations and Recommended Disclosures, a listed company should consider whether those disclosures provide sufficient detail to enable users to assess the listed company’s exposure to and approach to addressing climate-related issues. A listed company should carry out its own assessment to ascertain the appropriate level of detail to be included in its climate-related financial disclosures, taking into account factors such as:
(1) the level of its exposure to climate-related risks and opportunities; and (2) the scope and objectives of its climate-related strategy, noting that these factors may relate to the nature, size and complexity of the listed company’s business.
6.6.11 G (1) For the purposes of UKLR 6.6.6R(8), the FCA would ordinarily
expect a listed company to be able to make climate-related financial disclosures consistent with the TCFD Recommendations and Recommended Disclosures, except where it faces transitional challenges in obtaining relevant data or embedding relevant modelling or analytical capabilities. (2) In particular, the FCA would expect that a listed company should ordinarily be able to make disclosures consistent with:
(a) the recommendation and recommended disclosures on governance in the TCFD Recommendations and Recommended Disclosures; (b) the recommendation and recommended disclosures on risk management in the TCFD Recommendations and Recommended Disclosures; and (c) recommended disclosures (a) and (b) set out under the recommendation on strategy in the TCFD Recommendations and Recommended Disclosures, to the extent that the listed company does not face the transitional challenges referred to in (1) in relation to such disclosures.

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6.6.12 G Where making disclosures on transition plans as part of its disclosures on
strategy under the TCFD Recommendations and Recommended Disclosures, a listed company that is headquartered in, or operates in, a country that has made a commitment to a net zero economy, such as the UK’s commitment in the Climate Change Act 2008 (2050 Target Amendment) Order 2019, is encouraged to assess the extent to which it has considered that commitment in developing and disclosing its transition plan. Where it has not considered this commitment in developing and disclosing its transition plan, the FCA encourages a listed company to explain why it has not done so.
6.6.13 R In relation to UKLR 6.6.6R(10), where individuals on a listed company’s
board or in its executive management are situated overseas, and data protection laws in that jurisdiction prevent the collection or publication of some or all of the personal data required to be disclosed under that provision, a listed company may instead explain the extent to which it is unable to make the relevant disclosures.
6.6.14 G Given the range of possible approaches to data collection for reporting on
gender identity or sex for the purposes of UKLR 6.6.6R(10), a listed company may add to the categories included in the first column of the
table in UKLR 6 Annex 1R(1) in order to reflect the basis on which it has
collected data.
6.6.15 G In relation to UKLR 6.6.6R(11), the FCA expects a listed company’s
approach to data collection to be:
(1) consistent for the purposes of reporting under both UKLR 6.6.6R(9) and (10); and (2) consistent across all individuals in relation to whom data is being reported. The FCA expects the explanation of a listed company’s approach to data collection to include the method of collection and/or source of the data and, where data collection is done on the basis of self-reporting by the individuals concerned, a description of the questions asked.
6.6.16 G In addition to the information required under UKLR 6.6.6R(9) to (11) (and
without prejudice to the requirements of DTR 7.2.8AR), a listed company may, if it wishes to do so, include the following in its annual financial report:
(1) a brief summary of any key policies, procedures and processes, and any wider context, that it considers contribute to improving the diversity of its board and executive management; (2) any mitigating factors or circumstances which make achieving diversity on its board more challenging (for example, the size of

FCA 2024/23 the board or the country in which its main operations are located); and (3) any risks it foresees in being able to meet or continue to meet the board diversity targets in UKLR 6.6.6R(9)(a) in the next accounting period, or any plans to improve the diversity of its board.
6.6.17 R An overseas company with a listing of equity shares in the equity shares
(commercial companies) category must include in its annual report and accounts the information in UKLR 6.6.6R(5) to (11).
6.6.18 R (1) An overseas company with a listing of equity shares in the equity
shares (commercial companies) category must comply with DTR
7.2 (Corporate governance statements) as if it were an issuer to
which that section applies.
(2) An overseas company with a listing of equity shares in the equity shares (commercial companies) category which complies with UKLR 6.6.17R will be taken to satisfy the requirements of DTR 7.2.2R and DTR 7.2.3R, but must comply with all of the other requirements of DTR 7.2 as if it were an issuer to which that
section applies.
Information required by law
6.6.19 G The requirements of UKLR 6.6.6R(6) relating to corporate governance are
additional to the information required by law to be included in the listed company’s annual report and accounts. Auditors’ report
6.6.20 R A listed company must ensure that the auditors review each of the
following before the annual report is published:
(1) statements by the directors regarding going concern and longerterm viability as required by UKLR 6.6.6R(3); and (2) the parts of the statement required by UKLR 6.6.6R(6) that relate to Provisions 6 and 24 to 29 of the UK Corporate Governance Code. Strategic report with supplementary information
6.6.21 R Any strategic report with supplementary information provided to
shareholders by a listed company, as permitted under section 426 of the Companies Act 2006, must disclose:
(1) earnings per share; and

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(2) the information required for a strategic report set out in or under the Companies Act 2006 and the supplementary material required under section 426A of the Companies Act 2006. Sovereign controlled commercial companies
6.6.22 R Where:
(1) a listed company is a sovereign controlled commercial company and:
(a) has a sovereign controlling shareholder which was a controlling shareholder on the first occasion on which the company made an application for the admission of equity shares to the equity shares (commercial companies) category; (b) has made a notification in accordance with UKLR 6.4.18R and UKLR 6.4.19R; or (c) made an announcement in accordance with UKLR 21.5.6R(2) and UKLR 21.5.9R when it transferred the listing of its equity shares to the equity shares (commercial companies) category; and (2) the sovereign controlling shareholder is either:
(a) recognised by the government of the UK as a State; or (b) the UK, references to controlling shareholder must be read as excluding a sovereign controlling shareholder in, or for the purposes of, UKLR 6.6.1R(10) and UKLR 6.6.1R(13). 6 Annex Data on the diversity of the individuals on a listed company’s board and in 1 its executive management R The following tables set out the information that a listed company must include in its annual financial report under UKLR 6.6.6R(10), and the format in which it must be set out. (1) Table for reporting on gender identity or sex Number of board members Percentage of the board Number of senior positions on the board (CEO, Number in executive management Percentage of executive management

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CFO, SID and chair)
Men
Women
[Other categories]
Not specified/ prefer not to say
[Note: The placeholder for ‘Other categories’ is optional and should be used to indicate additional categories which a listed company may wish to include in accordance with UKLR 6.6.14G.] (2) Table for reporting on ethnic background Number of Percentage Number Number in Percentage board of the board of senior executive of executive members positions management management on the board (CEO, CFO, SID and chair) White British or other White (including minoritywhite groups) Mixed/ Multiple ethnic groups

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Asian/Asian
British
Black/African
/ Caribbean/
Black British
Other ethnic group
Not specified/ prefer not to say
7 Equity shares (commercial companies): significant transactions and reverse takeovers
7.1 Preliminary
Application
7.1.1 R This chapter applies to a company that has a listing of equity shares in the
equity shares (commercial companies) category.
Purpose
7.1.2 G (1) The purpose of this chapter is to set out:
(a) the requirements for a listed company in relation to significant transactions and reverse takeovers; and (b) certain other transactions where a listed company must comply with the requirements for significant transactions. (2) The requirements are intended to ensure that holders of listed equity shares:
(a) are notified of:

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(i) significant transactions;
(ii) certain indemnities and similar arrangements; (iii) certain issues by major subsidiary undertakings; and (iv) reverse takeovers; and (b) have the opportunity to vote on reverse takeovers. (3) The requirements are also intended to ensure that a listed company discloses detailed information concerning the transactions in (2)(a)(i) to (iv) on a timely basis, to support engagement between the listed company and its shareholders and to enhance market transparency. (4) The requirements complement but do not displace a listed company’s wider obligations under articles 17 and 18 of the Market Abuse Regulation to manage and disclose inside information. Meaning of ‘significant transaction’
7.1.3 R In UKLR, a transaction is classified as a significant transaction where any
percentage ratio is 25% or more.
Meaning of ‘reverse takeover’
7.1.4 R (1) In UKLR, a reverse takeover means a transaction consisting of an
acquisition of a business, a company or assets:
(a) where any percentage ratio is 100% or more; or (b) which in substance results in a fundamental change in the business or in a change in board or voting control of the issuer. (2) Paragraph (1) applies whether such acquisition is effected:
(a) by way of a direct acquisition by the issuer or a subsidiary; (b) by way of the issuer introducing a new holding company to its corporate structure and then carrying out the acquisition through the new holding company; or (c) in any other way.
7.1.5 G For the purpose of UKLR 7.1.4R(1)(b), the FCA considers that the
following factors are indicators of a fundamental change:

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(1) the extent to which the transaction will change the strategic direction or nature of the issuer’s business; (2) whether its business will be part of a different industry sector following the completion of the transaction; or (3) whether its business will deal with fundamentally different suppliers and end users. Meaning of ‘transaction’
7.1.6 R In this chapter (except where specifically provided to the contrary) a
reference to a transaction by a listed company:
(1) includes:
(a) (subject to paragraph (2)(a) to (g)) all agreements (including amendments to agreements) entered into by the listed company or its subsidiary undertakings; (b) the grant or acquisition of an option as if the option had been exercised, except that, if exercise is solely at the listed company’s or subsidiary undertaking’s discretion, the transaction will be classified on exercise and only the consideration (if any) for the option will be classified on the grant or acquisition; and (c) joint venture arrangements; and (2) excludes:
(a) a transaction in the ordinary course of business; (b) an issue of securities, or a transaction to raise finance, which does not involve the acquisition or disposal of any fixed asset of the listed company or of its subsidiary undertakings; (c) any transaction between the listed company and its wholly owned subsidiary undertaking or between its wholly owned subsidiary undertakings; (d) a break fee arrangement; (e) an indemnity or similar arrangement, except where the agreement or arrangement meets the conditions set out in UKLR 7.4.1R(1); (f) an issue of equity shares by a major subsidiary undertaking of a listed company, except where the issue meets the conditions set out in UKLR 7.4.4R; and

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(g) a transaction where the listed company purchases its own equity shares.
7.1.7 G This chapter is intended to cover transactions that are outside the ordinary
course of the listed company’s business and may change a security holder’s economic interest in the company’s assets and liabilities (whether or not the change in the assets or liabilities is recognised on the company’s balance sheet). Meaning of ‘ordinary course of business’
7.1.8 G (1) The assessment of whether a transaction is in the ordinary course
of business under this chapter will depend on the specific circumstances of the listed company. (2) Factors that may indicate whether a transaction is in the ordinary course of a company’s business include:
(a) the size and incidence of similar transactions which the company has entered into; (b) the nature and size of the company’s existing business and common factors within the industry sector in which it operates; (c) the company’s corporate strategy for its business, including in relation to growth and industry focus, as set out in the company’s latest published prospectus or annual financial report; (d) the existing accounting treatment (for a disposal) or planned accounting treatment (for an acquisition or new arrangement) by the listed company; and (e) whether its shareholders could reasonably expect the company to enter into the transaction, taking into account:
(i) the factors in (a) to (d);
(ii) any further information that the company has already notified to a RIS; (iii) the subject matter of the transaction; (iv) the terms of the transaction; (v) the anticipated impact on the listed company; and (vi) the associated benefits and risks.

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7.1.9 G Transactions that are likely to be in the ordinary course of business
include:
(1) regular trading activities (if the company is a trading company); (2) ongoing commercial arrangements and purchases commonly undertaken as part of the existing business or within the industry sector in which the company operates; (3) capital expenditure to support and maintain the existing business and its infrastructure; (4) capital expenditure to add scale to the existing business in line with the company’s business strategy as previously notified to a RIS (including, for example, within the latest published prospectus or annual financial report); or (5) in the case of a listed property company, where the accounting treatment of a property that is acquired or disposed of is such that:
(a) for an acquisition, the property will be classified as a current asset in the company’s published accounts; or (b) for a disposal, the property was classified as a current asset in the company’s published accounts.
7.1.10 G Transactions that are unlikely to be in the ordinary course of business
include:
(1) mergers with, or acquisitions of, other businesses (whether structured by way of a share or asset acquisition); (2) transactions that would lead to a substantial involvement in a business activity that did not previously form a significant part of the listed company’s principal activities; (3) transactions that would lead to the listed company no longer having a substantial involvement in a business activity that forms a significant part of its principal activities; or (4) transactions which are entered into to alleviate financial difficulty.
7.1.11 R For the purposes of UKLR 7.1.6R(2)(a), a transaction in the ordinary
course of business excludes a reverse takeover.
Sponsors
7.1.12 R A listed company must appoint a sponsor where it proposes to make a
request to the FCA to modify, waive or substitute the operation of UKLR 7.

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7.1.13 R A listed company must appoint a sponsor where it proposes to make a
request to the FCA for individual guidance in relation to the listing rules, the disclosure requirements or the transparency rules in connection with a matter referred to in UKLR 7.
7.1.14 R If a listed company is proposing to enter into a transaction which – due to
its size or nature – could amount to a reverse takeover, it must obtain the guidance of a sponsor to assess the application of the listing rules, the disclosure requirements and the transparency rules.
7.2 Classifying transactions
Classifying transactions
7.2.1 G A transaction is classified by assessing its size relative to that of the listed
company proposing to make it. The comparison of size is made using the percentage ratios resulting from applying the class test calculations to a transaction. The class tests are set out in UKLR 7 Annex 1 (and modified or added to for specialist companies under UKLR 7.2.3R to UKLR 7.2.8R).
7.2.2 G The class tests set out in UKLR 7 Annex 1 are applicable for the purposes
of determining whether a transaction is a significant transaction or a reverse takeover. Classification of transactions by listed property companies
7.2.3 R UKLR 7 Annex 1 is modified as follows in relation to acquisitions or
disposals of property by a listed property company:
(1) for the purposes of paragraph 2R(1) (the gross assets test), the assets test is calculated by dividing the transaction consideration by the gross assets of the listed property company and paragraphs 2R(5) and 2R(6) do not apply; (2) for the purposes of paragraph 2R(1) (the gross assets test), if the transaction is an acquisition of land to be developed, the assets test is calculated by dividing the transaction consideration and any financial commitments relating to the development by the gross assets of the listed property company and paragraphs 2R(5) and 2R(6) do not apply; (3) for the purposes of paragraph 2R(2), the gross assets of a listed property company are, at the option of the company:
(a) the aggregate of the company’s share capital and reserves (excluding minority interests); (b) the book value of the company’s properties (excluding those properties classified as current assets in the latest published annual report and accounts); or

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(c) the published valuation of the company’s properties (excluding those properties classified as current assets in the latest published annual report and accounts); (4) paragraph 4R(1) (the consideration test) does not apply but instead the test in UKLR 7.2.4R applies; and (5) paragraph 6R(1) (the gross capital test) applies to disposals as well as acquisitions of property.
7.2.4 R (1) In addition to the tests in UKLR 7 Annex 1, if the transaction is an
acquisition of property by a listed property company and any of the consideration is in the equity shares of that company, the listed company must determine the percentage ratios that result from the calculations under the test in (2). (2) The share capital test is calculated by dividing the number of consideration shares to be issued by the number of equity shares in issue (excluding treasury shares).
7.2.5 R (1) In addition to the tests in UKLR 7 Annex 1, a listed property
company must determine the percentage ratios that result from the calculation under the test in (2). (2) The net annual rent test is calculated by dividing the net annual rent attributable to the assets the subject of the transaction by the net annual rent of the listed company. (3) For the purposes of calculating the net annual rent test, except as otherwise stated in (4) to (7), figures used to classify net annual rent must be the figures shown in the latest published audited consolidated accounts or, if a listed company has, or will have, published a preliminary statement of later annual results at the time the terms of a transaction are agreed, the figures shown in that preliminary statement. (4) (a) The figures of the listed company must be adjusted to take account of transactions completed during the period to which the figures referred to in (3) relate, and subsequent completed transactions where any percentage ratio was 5% or more at the time the terms of the relevant transaction were agreed. (b) The figures of the target company or business must be adjusted to take account of transactions completed during the period to which the figures referred to in (3) relate, and subsequent completed transactions where any percentage ratio would have been 5% or more at the time the terms of the relevant transaction were agreed when classified against the target as a whole.

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(5) Figures on which the auditors are unable to report without modification must be disregarded. (6) The principles in (3) to (5) also apply (to the extent relevant) to calculating the net annual rent of the target company or business. (7) The FCA may modify (5) in appropriate cases to permit figures to be taken into account. Classification of transactions by listed mineral companies
7.2.6 R (1) In addition to the tests in UKLR 7 Annex 1, a listed mineral
company undertaking a transaction involving significant mineral resources or rights to significant mineral resources must determine the percentage ratios that result from the calculations under the test in paragraph (2). (2) The reserves test is calculated by dividing the volume or amount of the proven reserves and probable reserves to be acquired or disposed of by the volume or amount of the aggregate proven reserves and probable reserves of the mineral company making the acquisition or disposal.
7.2.7 G If the mineral resources are not directly comparable, the FCA may modify
UKLR 7.2.6R(2) to permit valuations to be used instead of amounts or volumes.
7.2.8 R When calculating the size of a transaction under UKLR 7 Annex 1 and
UKLR 7.2.6R(2), account must be taken of any associated transactions or loans effected or intended to be effected, and any contingent liabilities or commitments. Classifying joint ventures
7.2.9 R When classifying a joint venture under UKLR 7, a listed company must
classify both sides to a joint venture, so that both the disposal into the joint venture and the acquisition of an interest in the joint venture are classified. The 2 sets of class tests must not be aggregated and the highest result from the class tests will determine the overall classification of the transaction.
7.2.10 G (1) It is common, when entering into a joint venture, for the partners
to include exit provisions in the terms of the agreement. These typically give each partner a combination of rights and obligations to either sell their own holding or to acquire their partner’s holding should certain triggering events occur. (2) If the listed company does not retain sole discretion over the event which requires them to either purchase the joint venture partner’s stake or to sell their own, UKLR 7.1.6R(1)(b) requires this obligation to be classified at the time it is agreed as though it had

FCA 2024/23 been exercised at that time. Further, if the consideration to be paid is to be determined by reference to the future profitability of the joint venture or an independent valuation at the time of exercise, this consideration will be treated as being uncapped. If this is the case, the initial agreement will be classified in accordance with UKLR 7 Annex 1 4R(3) at the time it is entered into. (3) If the listed company does retain sole discretion over the triggering event, or if the listed company is making a choice to purchase or sell following an event which has been triggered by the joint venture partner, the purchase or sale must be classified when this discretion is exercised or when the choice to purchase or sell is made. (4) Where an issuer enters into a joint venture exit arrangement which takes the form of a put or call option and exercise of the option is solely at the discretion of the other party to the arrangement, the transaction should be classified at the time it is agreed as though the option had been exercised at that time. Aggregating transactions – significant transactions
7.2.11 R (1) Subject to paragraph (2), transactions completed during the 12
months before the date of the latest transaction must be aggregated with that transaction for the purposes of classification as a significant transaction if:
(a) they are entered into by the company with the same person or with persons connected with one another; (b) they involve the acquisition or disposal of securities or an interest in one particular company; or (c) together they lead to substantial involvement in a business activity which did not previously form a significant part of the company’s principal activities. (2) Transactions completed during the 12-month period in (1) are not required to be aggregated with the latest transaction if they have previously been classified as a significant transaction (either individually or collectively).
7.2.12 R If under UKLR 7.2.11R any of the aggregated percentage ratios is 25% or
more, the aggregated transactions will be classified as a significant transaction, in which case the listed company must comply with the requirements in UKLR 7.3 (Significant transactions) in respect of the aggregated transactions, modified as follows:
(1) Where the aggregated transactions involve the acquisition or disposal of securities or an interest in one particular company,

FCA 2024/23 the requirements in UKLR 7.3 apply to the transactions as a whole. (2) If (1) does not apply, the requirements in UKLR 7.3 apply:
(a) to each individual transaction that has been aggregated where any percentage ratio for the individual transaction is 5% or more; or (b) if there are no such individual transactions, to the one that led to the relevant aggregated percentage ratio reaching or exceeding 25%.
7.2.13 G (1) The purpose of UKLR 7.2.12R is to set out how the requirements
in this chapter apply to transactions that are only treated as significant transactions on an aggregated basis. (2) UKLR 7.2.12R(1) is intended to support a clearer and more succinct explanation of an acquisition or disposal in a particular company by allowing the relevant information to be provided in an aggregated way. (3) In other situations, UKLR 7.2.12R(2) ensures that the disclosure requirements apply in a proportionate way so that, while the relevant information must be provided for each transaction, information is not generally required about transactions below a de minimis threshold. (4) UKLR 7.3.1R(2)(a) requires any notification about a significant transaction to state why the transaction is notifiable under UKLR
7. Where a notification relates to aggregated transactions, it
should explain why the transactions have been aggregated, having regard to whether UKLR 7.2.11R(1)(a), (b) or (c) applies. (5) UKLR 7.3.13R sets out where the listed company must make a supplementary notification in relation to further transactions entered into after aggregated transactions have been classified as a significant transaction.
7.2.14 G The FCA may modify these rules to require the aggregation of
transactions in circumstances other than those specified in UKLR 7.2.11R. Aggregating transactions – reverse takeovers
7.2.15 R (1) Subject to paragraph (2), transactions completed during the 12
months before the date of the latest transaction must be aggregated with that transaction for the purposes of classification as a reverse takeover if:
(a) they are entered into by the company with the same person or with persons connected with one another;

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(b) they involve the acquisition or disposal of securities or an interest in one particular company; or (c) together they lead to substantial involvement in a business activity which did not previously form a significant part of the company’s principal activities. (2) Transactions completed during the 12-month period in (1) are not required to be aggregated with the latest transaction if they have previously been classified as a reverse takeover (either individually or collectively).
7.2.16 R If under UKLR 7.2.15R the aggregation of transactions results in a reverse
takeover, the listed company must comply with the requirements in UKLR
7.5 (Reverse takeovers) in respect of the aggregated transactions as a
whole but the requirement for shareholder approval applies only to the latest transaction.
7.2.17 G The FCA may modify these rules to require the aggregation of
transactions in circumstances other than those specified in UKLR 7.2.15R.
7.3 Significant transactions
Notification of significant transactions
7.3.1 R (1) A listed company must notify a RIS as soon as possible after the
terms of a significant transaction are agreed.
(2) The notification must:
(a) state why the transaction is notifiable under UKLR 7; (b) contain an overview of the transaction and the company’s reasons for entering into it, which includes the information required by UKLR 7 Annex 2 Part 1 (Information relating to the transaction); and (c) include any further information the company considers relevant, having regard to the purpose of this chapter set out in UKLR 7.1.2G.
7.3.2 R (1) A listed company must notify a RIS as soon as possible after:
(a) the terms of a significant transaction are agreed; and (b) the information in (2) has been prepared or the listed company becomes, or ought reasonably to have become, aware of the information, and in any event by no later than the completion of the transaction.

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(2) The notification must include:
(a) for a disposal, the information required by UKLR 7 Annex 2
Part 2 (Disposals – financial information); and
(b) for all transactions, the information required by UKLR 7
Annex 2 Part 3 (Non-financial information).
7.3.3 R (1) A listed company must notify a RIS as soon as possible after the
completion of the significant transaction.
(2) The notification must state that:
(a) completion of the transaction has taken place; and (b) except as disclosed, there has been no material change affecting any matter contained in a notification under UKLR 7.3.1R or UKLR 7.3.2R. (3) In (2)(b), ‘material’ has the meaning in UKLR 7.3.14R.
7.3.4 R (1) Where a listed company includes details of estimated synergies or
other quantified estimated financial benefits expected to arise from a significant transaction in a notification required by UKLR 7.3.1R, UKLR 7.3.2R or UKLR 7.3.3R, the notification must include the information required by UKLR 7 Annex 2 Part 4.1 (Synergy benefits). (2) Where a listed company includes financial information (including the information required by UKLR 7 Annex 2 Part 2) in a notification required by UKLR 7.3.1R, UKLR 7.3.2R or UKLR 7.3.3R, the notification must include the information required by UKLR 7 Annex 2 Part 4.2 to 4.4 (Sources of information). (3) Where a listed company includes pro forma financial information in a notification required by UKLR 7.3.1R, UKLR 7.3.2R or UKLR 7.3.3R, the notification must include the information required by UKLR 7 Annex 2 Part 4.5 (Pro forma financial information).
7.3.5 G (1) The purpose of UKLR 7.3.1R to UKLR 7.3.4R is to support
engagement between the listed company and its shareholders and to enhance market transparency. (2) When complying with UKLR 7.3.1R to UKLR 7.3.4R, a listed company should consider the nature and circumstances of the relevant transaction and what information it is necessary to disclose to support shareholder engagement and market transparency. (3) For example, where a listed company has entered into the transaction to alleviate financial difficulty (including anticipated

FCA 2024/23 financial difficulty), the notification required by UKLR 7.3.1R should describe the nature, urgency and severity of that financial difficulty. The notification may also contain information about financing arrangements connected to the transaction, and about what may happen if a proposed transaction does not complete. Incorporation by reference
7.3.6 R Information may be incorporated in a notification made by a listed
company under UKLR 7.3.2R by reference to relevant information contained in:
(1) an approved prospectus or listing particulars of that listed company; or (2) any other published document of that listed company that has been filed with the FCA.
7.3.7 R Where a notification made by a listed company under UKLR 7.3.1R,
UKLR 7.3.2R or UKLR 7.3.3R includes information in accordance with UKLR 7.3.4R, that information may be incorporated in such notification by reference to relevant information contained in:
(1) an approved prospectus or listing particulars of that listed company; or (2) any other published document of that listed company that has been filed with the FCA.
7.3.8 R Information incorporated by reference must be the latest available to the
listed company.
7.3.9 R Information required by UKLR 7.3.1R and UKLR 7.3.3R must not be
incorporated by reference to information contained in another document.
7.3.10 R When information is incorporated by reference, a cross-reference list must
be provided in the notification to enable security holders to easily identify specific items of information. The cross-reference list must specify where the information can be accessed by security holders. Omission of information
7.3.11 G The FCA may authorise the omission of information required by UKLR
7.3.1R to UKLR 7.3.4R if it considers that:
(1) disclosure of that information would be:
(a) contrary to the public interest; or
(b) seriously detrimental to the listed company; and

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(2) the omission would not be likely to mislead the public with regard to facts and circumstances that are essential for the assessment of the matter covered by the notification.
7.3.12 R A request to the FCA to authorise the omission of specific information in a
particular case must:
(1) be made in writing by the listed company; (2) identify the specific information concerned and the specific reasons for the omission; and (3) state why, in the listed company’s opinion, one or more grounds in UKLR 7.3.11G apply. Supplementary notification
7.3.13 R (1) A listed company must notify a RIS as soon as possible if, after the
notification under UKLR 7.3.1R or UKLR 7.3.2R and before completion of the transaction:
(a) it becomes aware that there has been a material change affecting any matter contained in that earlier notification; (b) it becomes aware that a material new matter has arisen which would have been required to be mentioned in that earlier notification if it had arisen at the time of the preparation of that notification; (c) it has agreed a material change to the terms of the transaction; or (d) it has agreed the terms of one or more further transactions that are of a type referred to in UKLR 7.2.11R(1)(a), (b) or (c) and are material but are not a significant transaction in their own right (individually or together). (2) The supplementary notification in (1)(a), (b) or (c) must:
(a) give details of the change or new matter; and (b) contain a statement that, except as disclosed:
(i) there has been no material change affecting any matter contained in the earlier notification; and (ii) no other material new matter has arisen which would have been required to be mentioned in that earlier notification if it had arisen at the time of the preparation of that notification.

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(3) The supplementary notification in (1)(d) must include the information set out in UKLR 7 Annex 2 Part 1 (Information relating to the transaction) in relation to the further transaction or transactions.
7.3.14 R In UKLR 7.3.13R, ‘material’ means material for the purpose of making an
informed assessment of the assets and liabilities, financial position, profits and losses and prospects of the listed company and the rights attaching to any securities forming part of the consideration. It includes:
(1) a change in the terms of the transaction that increases any of the percentage ratios by 10% or more; and (2) where the further transaction or transactions referred to in UKLR 7.3.13R(1)(d) would, if they were aggregated with the transaction or aggregated transactions (as applicable), result in an increase of any of the percentage ratios by 10% or more.
7.4 Indemnities and major subsidiary undertakings
Indemnities and similar arrangements
7.4.1 R (1) Where a listed company proposes to enter into any agreement or
arrangement with a party (other than a wholly owned subsidiary undertaking of the listed company):
(a) under which a listed company agrees to discharge any liabilities for costs, expenses, commissions or losses incurred by or on behalf of that party, whether or not on a contingent basis; (b) which is exceptional; and (c) under which the maximum liability is either unlimited, or is equal to or exceeds an amount equal to 25% of the average of the listed company’s profits for the last 3 financial years (using the figures shown in the audited consolidated accounts or preliminary statement of later annual results published before the terms are agreed, with losses taken as nil profit and included in the average), a listed company must notify a RIS as soon as possible after the terms of any agreement or arrangement have been agreed. (2) The notification under (1) must comply with the requirements in UKLR 7.3 (Significant transactions) as applicable. (3) Paragraph (1) does not apply to a break fee arrangement. (4) In (1)(c), ‘profits’ means profits after deducting all charges except taxation.

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7.4.2 G For the purposes of UKLR 7.4.1R(1)(b), the FCA considers that the
following indemnities are not exceptional:
(1) those customarily given in connection with sale and purchase agreements; (2) those customarily given to underwriters or placing agents in an underwriting or placing agreement; (3) those given to advisers against liabilities to third parties arising out of providing advisory services; and (4) any other indemnity that is specifically permitted to be given to a director or auditor under the Companies Act 2006.
7.4.3 G If the calculation under UKLR 7.4.1R(1)(c) produces an anomalous result,
the FCA may disregard the calculation and modify that rule to substitute other relevant indicators of the size of the indemnity or other arrangement given – for example, 1% of market capitalisation. Issues by major subsidiary undertakings
7.4.4 R If:
(1) a major subsidiary undertaking of a listed company issues equity shares for cash or in exchange for other securities or to reduce indebtedness; (2) the issue would dilute the listed company’s percentage interest in the major subsidiary undertaking; and (3) the economic effect of the dilution is equivalent to a disposal of 25% or more of the aggregate of the gross assets or profits (after the deduction of all charges except taxation) of the group, a listed company must notify a RIS as soon as possible after the terms of the issue have been agreed.
7.4.5 R The notification required in UKLR 7.4.4R must comply with the
requirements set out in UKLR 7.3 (Significant transactions) as applicable.
7.5 Reverse takeovers
Notification and shareholder approval
7.5.1 R An issuer must, in relation to a reverse takeover:
(1) comply with the requirements of UKLR 7.3 other than UKLR 7.3.2R for the reverse takeover;

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(2) send a reverse takeover circular to its shareholders and obtain their prior approval in a general meeting for the reverse takeover; and (3) ensure that any agreement effecting the reverse takeover is conditional on that approval being obtained.
7.5.2 G UKLR 10 sets out requirements for the content and approval of reverse
takeover circulars.
Material change to terms of a reverse takeover transaction
7.5.3 R If, after obtaining shareholder approval but before the completion of a
reverse takeover, there is a material change to the terms of the transaction, the listed company must comply again separately with UKLR 7.5.1R in relation to the transaction.
7.5.4 G The FCA would (among other things) generally consider an increase of
10% or more in the consideration payable to be a material change to the terms of the transaction. Supplementary circular
7.5.5 R (1) If a listed company becomes aware of a matter described in (2)
after the publication of a reverse takeover circular, but before the date of a general meeting, it must, as soon as practicable:
(a) advise the FCA of the matters of which it has become aware; and (b) send a supplementary circular to holders of its listed equity shares, providing an explanation of the matters referred to in (2). (2) The matters referred to in (1) are:
(a) a material change affecting any matter the listed company is required to have disclosed in a reverse takeover circular; or (b) a material new matter which the listed company would have been required to disclose in the reverse takeover circular if it had arisen at the time of its publication. (3) The listed company must have regard to UKLR 10.3.1R(3) when considering the materiality of any change or new matter under UKLR 7.5.5R(2).
7.5.6 G UKLR 10 applies in relation to a supplementary circular. It may be
necessary to adjourn a convened shareholder meeting if a supplementary

FCA 2024/23 circular cannot be sent to holders of listed equity shares at least 7 days prior to the convened shareholder meeting as required by UKLR 10.1.9R. Cancellation of listing
7.5.7 G If an issuer is proposing to enter into a transaction classified as a reverse
takeover, it should consider UKLR 21.2.2G and UKLR 21.2.5G.
7.5.8 G Where an issuer completes a reverse takeover, the FCA will seek to cancel
the listing of an issuer’s equity shares unless the FCA is satisfied that circumstances exist such that cancellation is not required. The FCA will have regard to UKLR 21.2.1R and the individual circumstances of the case.
7.5.9 R Where the issuer’s listing is cancelled following completion of a reverse
takeover, the issuer must re-apply for the listing of the shares.
7.5.10 R A sponsor must contact the FCA on behalf of an issuer as early as
possible:
(1) before a reverse takeover which has been agreed or is in contemplation is announced; or (2) where details of the reverse takeover have leaked, to discuss whether a cancellation of the issuer’s listing is appropriate on completion of the reverse takeover.
7.5.11 G UKLR 7.5.12G to UKLR 7.5.15G set out circumstances in which the FCA
will generally be satisfied that a cancellation is not required. Acquisitions of targets within the same listing category: issuer maintaining its listing category
7.5.12 G Where:
(1) an issuer acquires the shares of a target; (2) those shares are also listed in the equity shares (commercial companies) category; and (3) the issuer wishes to maintain its listing of shares in the equity shares (commercial companies) category, the FCA will generally be satisfied that a cancellation is not required on completion of a reverse takeover. Acquisitions of targets from different listing categories: issuer maintaining its listing category
7.5.13 G Where an issuer acquires the shares of a target with a different listing
category from its own and the issuer wishes to maintain its listing in the

FCA 2024/23 equity shares (commercial companies) category, the FCA will generally be satisfied that a cancellation is not required on completion of a reverse takeover if:
(1) the issuer will continue to be eligible for the equity shares (commercial companies) category following completion of the transaction; (2) a sponsor provides an eligibility letter to the FCA setting out how the issuer as enlarged by the acquisition satisfies each listing rule requirement that is relevant to it being eligible for the equity shares (commercial companies) category not less than 20 business days prior to the announcement of the reverse takeover; and (3) the issuer makes an announcement or publishes a circular explaining:
(a) the background and reasons for the acquisition; (b) any changes to the acquiring issuer’s business that have been made or are proposed to be made in connection with the acquisition; (c) the effect of the transaction on the acquiring issuer’s obligations under the listing rules; (d) how the acquiring issuer will continue to meet the relevant requirements for listing; and (e) any other matter that the FCA may reasonably require. Acquisitions of targets from different listing categories: issuer changing listing category
7.5.14 G The FCA will generally be satisfied that a cancellation is not required on
completion of a reverse takeover if:
(1) the target is listed with a different listing category from that of the issuer; (2) the issuer wishes to transfer its listing to a different listing category in conjunction with the acquisition; and (3) the issuer as enlarged by the relevant acquisition complies with the relevant requirements of UKLR 21.5 to transfer to a different listing category.
7.5.15 G Where an issuer is applying UKLR 21.5 in order to avoid a cancellation as
contemplated by UKLR 7.5.14G, the FCA will normally waive the requirement for shareholder approval under UKLR 21.5.6R(3) where the issuer is obtaining separate shareholder approval for the acquisition.

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7 Annex The class tests
Class tests
1 G This annex sets out the following class tests:
(1) the gross assets test;
(2) the consideration test; and
(3) the gross capital test.
The gross assets test
2 R (1) The gross assets test is calculated by dividing the gross assets the subject of the transaction by the gross assets of the listed company. (2) The ‘gross assets of the listed company’ means the total non-current assets, plus the total current assets, of the listed company. (3) For:
(a) an acquisition of an interest in an undertaking which will result in consolidation of the assets of that undertaking in the accounts of the listed company; or (b) a disposal of an interest in an undertaking which will result in the assets of that undertaking no longer being consolidated in the accounts of the listed company, the ‘gross assets the subject of the transaction’ means the value of 100% of that undertaking’s assets, irrespective of what interest is acquired or disposed of. (4) For an acquisition or disposal of an interest in an undertaking which does not fall within (3), the ‘gross assets the subject of the transaction’ means:
(a) for an acquisition, the consideration together with liabilities assumed (if any); and (b) for a disposal, the assets attributed to that interest in the listed company’s accounts. (5) If there is an acquisition of assets other than an interest in an undertaking, the ‘assets the subject of the transaction’ means the consideration or, if greater, the book value of those assets as they will be included in the listed company’s balance sheet.

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(6) If there is a disposal of assets other than an interest in an undertaking, the ‘assets the subject of the transaction’ means the book value of the assets in the listed company’s balance sheet. 3 G The FCA may modify UKLR 7 Annex 1 2R to require, when calculating the assets the subject of the transaction, the inclusion of further amounts if contingent assets or arrangements referred to in UKLR 7.4.1R (Indemnities and similar arrangements) are involved. The consideration test 4 R (1) The consideration test is calculated by taking the consideration for the transaction as a percentage of the aggregate market value of all the ordinary shares (excluding treasury shares) of the listed company. (2) For the purposes of (1):
(a) the consideration is the amount paid to the contracting party; (b) if all or part of the consideration is in the form of securities to be traded on a market, the consideration attributable to those securities is the aggregate market value of those securities; and (c) if deferred consideration is or may be payable or receivable by the listed company in the future, the consideration is the maximum total consideration payable or receivable under the agreement. (3) If the total consideration is not subject to any maximum (and any of the other class tests indicate a percentage ratio of at least 5%), the transaction is to be treated as a significant transaction. (4) For the purposes of (2)(b), the figures used to determine consideration consisting of:
(a) securities of a class already listed must be the aggregate market value of all those securities on the last business day before the announcement of the transaction; and (b) a new class of securities for which an application for listing will be made must be the expected aggregate market value of all those securities. (5) For the purposes of (1), the figure used to determine market capitalisation is the aggregate market value of all the ordinary shares (excluding treasury shares) of the listed company at the close of business on the last business day before the announcement of the transaction. 5 G The FCA may modify UKLR 7 Annex 1 4R to require the inclusion of further amounts in the calculation of the consideration – for example, if the purchaser agrees to discharge any liabilities, including the repayment of inter-company or

FCA 2024/23 third-party debt, whether actual or contingent, as part of the terms of the transaction. The gross capital test 6 R (1) The gross capital test is calculated by dividing the gross capital of the company or business being acquired by the gross capital of the listed company. (2) The test in (1) is only to be applied for an acquisition of a company or business. (3) For the purposes of (1), the ‘gross capital of the company or business being acquired’ means the aggregate of:
(a) the consideration (as calculated under UKLR 7 Annex 1 4R); (b) if a company, any of its shares and debt securities which are not being acquired; (c) all other liabilities (other than current liabilities) including for this purpose minority interests and deferred taxation; and (d) any excess of current liabilities over current assets. (4) For the purposes of (1), the gross capital of the listed company means the aggregate of:
(a) the market value of its shares (excluding treasury shares) and the issue amount of the debt security; (b) all other liabilities (other than current liabilities) including, for this purpose, minority interests and deferred taxation; and (c) any excess of current liabilities over current assets. (5) For the purposes of (1):
(a) figures used must be, for shares and debt security aggregated for the purposes of the gross capital percentage ratio, the aggregate market value of all those shares (or, if not available before the announcement of the transaction, their nominal value) and the issue amount of the debt security; and (b) for shares and debt security aggregated for the purposes of (3)(b), any treasury shares held by the company are not to be taken into account. Figures used to classify assets 7 R (1) For the purposes of calculating the tests in this annex, except as otherwise stated in (2) to (6), figures used to classify assets must be the figures

FCA 2024/23 shown in the latest published audited consolidated accounts or, if a listed company has, or will have, published a preliminary statement of later annual results at the time the terms of a transaction are agreed, the figures shown in that preliminary statement. (2) If a balance sheet has subsequently been published in an interim statement, gross assets and gross capital should be taken from the balance sheet published in the interim statement. (3) (a) The figures of the listed company must be adjusted to take account of transactions completed during the period to which the figures referred to in (1) or (2) relate, and subsequent completed transactions where any percentage ratio was 5% or more at the time the terms of the relevant transaction were agreed. (b) The figures of the target company or business must be adjusted to take account of transactions completed during the period to which the figures referred to in (1) or (2) relate, and subsequent completed transactions where any percentage ratio was 5% or more at the time the terms of the relevant transaction were agreed. (4) Figures on which the auditors are unable to report without modification must be disregarded. (5) When applying the percentage ratios to an acquisition by a company whose assets consist wholly or predominantly of cash or short-dated securities, the cash and short-dated securities must be excluded in calculating its assets and market capitalisation. (6) The principles in this paragraph also apply (to the extent relevant) to calculating the assets of the target company or business. 8 G The FCA may modify UKLR 7 Annex 1 7R(4) in appropriate cases to permit figures to be taken into account. Anomalous results 9 G If a calculation under any of the class tests produces an anomalous result or if a calculation is inappropriate to the activities of the listed company, the FCA may modify the relevant rule to substitute other relevant indicators of size, including industry-specific tests. Adjustments to figures 10 G Where a listed company wishes to make adjustments to the figures used in calculating the class tests pursuant to UKLR 7 Annex 1 9G, it should discuss this with the FCA before the class tests crystallise.

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7 Annex Notification requirements
This annex sets out the information to be included in a notification required by UKLR 7.3.1R, UKLR 7.3.2R, UKLR 7.3.3R and UKLR 7.5.1R.
Part 1 Information relating to the transaction
1.1 R A notification required by UKLR 7.3.1R and UKLR 7.5.1R must include the
following information:
(1) details of the transaction, including the name of the other party to the transaction; (2) an explanation of the reasons for entering into the transaction; (3) a description of the business carried on by, or using, the net assets the subject of the transaction; (4) the consideration, and how it is being satisfied (including the terms of any arrangements for deferred consideration); (5) the value of the gross assets the subject of the transaction; (6) the profits attributable to the assets the subject of the transaction; (7) the effect of the transaction on the listed company, including any benefits which are expected to accrue to the company, and any risks to the company, as a result of the transaction; (8) a statement of the effect of the transaction on the group’s earnings and assets and liabilities; (9) details of any service contracts of proposed directors of the listed company; (10) details of any break fee arrangements; (11) for a disposal, the application of the sale proceeds; (12) for a disposal, if securities are to form part of the consideration received, a statement as to whether the securities are to be sold or retained; (13) details of key individuals important to the business or company the subject of the transaction; (14) if the transaction is a joint venture, details of any exit arrangement;

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(15) if the transaction is required to be aggregated under UKLR 7.2.11R, details of transactions completed during the relevant period; and (16) a statement by the board that the transaction is, in the board’s opinion, in the best interests of security holders as a whole.
Part 2 Disposals - financial information
2.1 R A notification required by UKLR 7.3.2R must include the information in
UKLR 7 Annex 2 2.2R where the transaction involves a disposal.
2.2 R Where the transaction involves a disposal, the notification must include the
following:
(1) (a) when a listed company is disposing of an interest in a target which will result in the assets and liabilities which are the subject of the disposal no longer being consolidated:
(i) the last annual consolidated balance sheet; (ii) the consolidated income statements for the last 2 years drawn up to at least the level of profit or loss for the period; and (iii) the consolidated balance sheet and consolidated income statement (drawn up to at least the level of profit or loss for the period) at the issuer’s interim balance sheet date if the issuer has published interim financial statements since the publication of its last annual audited consolidated financial statements; (b) the information in (1)(a) must be extracted without material adjustment from the consolidation schedules that underlie the listed company’s audited consolidated accounts or, in the case of (1)(a)(iii), the interim financial information, and must be accompanied by a statement to this effect; and (c) where a change of accounting policies has occurred during the period covered by the financial information required by (1)(a), the financial information must be presented on the basis of both the original and amended accounting policies for the year prior to that in which the new accounting policy is adopted unless the change did not require a restatement of the comparative; (2) when a listed company is disposing of an interest in a target that has been accounted for as an investment, and the target’s securities that are the subject of the transaction are admitted to an investment exchange that enables intra-day price formation:

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(a) the amounts of the dividends or other distributions paid in the past 2 years; and (b) the price per security and the imputed value of the entire holding being disposed of at the close of business at the following times:
(i) on the last business day of each of the 6 months prior to the announcement of the transaction; and (ii) on the day prior to the announcement of the transaction; (3) when a listed company is disposing of an interest in a target that was accounted for using the equity method in the listed company’s annual consolidated accounts, the line entries relating to the target from its last audited consolidated balance sheet and those from its audited consolidated income statement for the past 2 years together with the equivalent line entries from its interim consolidated balance sheet and interim consolidated income statement, where the issuer has published subsequent interim financial information; and (4) where the information in (2) or (3) is not available or cannot be produced in accordance with the requirements in (1)(a):
(a) a statement by the board that the information is not available or cannot be produced; (b) an explanation as to how the value of the consideration has been arrived at; and (c) a statement by the board that it considers the consideration to be fair as far as the security holders of the company are concerned.
Part 3 Non-financial information
3.1 R A notification required by UKLR 7.3.2R must include the information
identified (by reference to certain paragraphs of Annex 1 of the PR Regulation) in the following table relating to the listed company and the undertaking the subject of the transaction. Information Listed company Undertaking the subject of the transaction

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Annex 1 item 17.1 –
Related party transactions
*
Annex 1 item 18.6.1 –
Legal and arbitration proceedings

*
Annex 1 item 18.7.1 –
Significant change in the issuer’s financial position

Annex 1 item 20.1 –
Material contracts

*
3.2 R The information required by Annex 1 item 20.1 (Material contracts) and
Annex 1 item 18.6.1 (Legal and arbitration proceedings) must be presented
as follows:
(1) for an acquisition, in separate statements for the listed company for the undertaking, business or assets to be acquired; or (2) for a disposal, in separate statements for the listed company and its subsidiary undertakings (on the basis that the disposal has taken place), and for the undertaking, business or assets to be disposed of.
3.3 R In determining what information is required to be included by virtue of
Annex 1 item 20.1 (Material contracts) if a prospectus or listing particulars
are not required, regard should be had as to whether information about that provision is information which securities holders of the issuer would reasonably require for the purpose of making a properly informed assessment of the transaction and its impact on the issuer.
3.4 R The information required by Annex 1 item 17.1 (Related party transactions):
(1) need only be given if it is relevant to the transaction; and (2) need not be given if it has already been published before the notification is made.
3.5 R (1) The information required by Annex 1 item 18.7.1 (Significant change
in the issuer’s financial position) need only be given for the undertaking which is the subject of the transaction if:
(a) the transaction involves a disposal; and (b) information required by UKLR 7 Annex 2 2.2R(1) or 2.2R(3) has been included in the notification.

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(2) Where information required by Annex 1 item 18.7.1 (Significant change in the issuer’s financial position) is given for both the listed company and the undertaking which is the subject of the transaction, the information must be presented in separate statements for the listed company and its subsidiary undertakings (on the basis that the disposal has taken place), and for the undertaking, business or assets to be disposed of.
Part 4 Synergy benefits, sources of information and pro forma financial
information
Synergy benefits
4.1 R Where a listed company includes details of estimated synergies or other
quantified estimated financial benefits expected to arise from a transaction in a notification required by UKLR 7.3.1R, UKLR 7.3.2R, UKLR 7.3.3R or UKLR 7.5.1R, the notification must include the following:
(1) the basis for the belief that those synergies or other quantified estimated financial benefits will arise; (2) an analysis and explanation of the constituent elements of the synergies or other quantified estimated financial benefits (including any costs) sufficient to enable the relative importance of those elements to be understood, including an indication of when they will be realised and whether they are expected to be recurring; (3) a base figure for any comparison drawn; (4) a statement that the synergies or other quantified estimated financial benefits are contingent on the transaction and could not be achieved independently; and (5) a statement that the estimated synergies or other quantified estimated financial benefits reflect both the beneficial elements and relevant costs. Sources of information
4.2 R Where a listed company includes financial information in a notification
required by UKLR 7.3.1R, UKLR 7.3.2R, UKLR 7.3.3R or UKLR 7.5.1R, the notification must cite the source of all financial information that it discloses in the notification and include the following:
(1) a statement of whether the financial information was extracted from accounts, internal financial accounting records, internal management accounting records, or an external or other source;

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(2) a statement of whether financial information that was extracted from audited accounts was extracted without material adjustment; and (3) an indication of which aspects of the financial information relate to:
(a) historical financial information;
(b) forecast or estimated financial information; or (c) pro forma financial information, with reference made to where the basis of presentation can be found.
4.3 R If financial information has not been extracted directly from audited
accounts, the notification must include the following:
(1) the basis and assumptions on which the financial information has been prepared; and (2) a statement that the financial information is unaudited or not reported on by an accountant.
4.4 R A listed company must provide investors with all necessary information to
understand the context and relevance of non-statutory figures. Pro forma financial information
4.5 R If a listed company includes pro forma financial information in a notification
required by UKLR 7.3.1R, UKLR 7.3.2R, UKLR 7.3.3R or UKLR 7.5.1R, the notification must:
(1) cite the sources of any unadjusted financial information that it discloses in the notification; and (2) include an explanation of the basis upon which the pro forma financial information has been prepared. 8 Equity shares (commercial companies): related party transactions
8.1 Preliminary
Application
8.1.1 R This chapter applies to a company that has a listing of equity shares in the
equity shares (commercial companies) category.
Purpose

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8.1.2 G The purpose of this chapter is to set out governance and notification
requirements for a listed company in relation to related party transactions. These requirements are intended to:
(1) ensure that the shareholders of companies with listed equity shares are notified of related party transactions when they are entered into by the listed company, and support engagement between the listed company and its shareholders in relation to related party transactions; and (2) enhance market transparency in relation to related party transactions.
8.1.3 G These requirements are also intended to prevent a related party from
taking advantage of its position and prevent any perception that it may have done so. Sponsors
8.1.4 G A listed company that is proposing to enter into a related party
transaction requiring the listed company to make a notification under UKLR 8.2.1R(4) must comply with the requirement to appoint a sponsor under UKLR 8.2.1R(3).
8.1.5 R A listed company must appoint a sponsor where it proposes to make a
request to the FCA to modify, waive or substitute the operation of UKLR 8.
8.1.6 R A listed company must appoint a sponsor where it proposes to make a
request to the FCA for individual guidance in relation to the listing rules, the disclosure requirements or the transparency rules in connection with a related party transaction. Definition of ‘related party transaction’
8.1.7 R In UKLR, a related party transaction means:
(1) a transaction (other than a transaction in the ordinary course of business) between a listed company and a related party; (2) an arrangement (other than an arrangement in the ordinary course of business) pursuant to which a listed company and a related party each invests in, or provides finance to, another undertaking or asset; or (3) any other similar transaction or arrangement (other than a transaction or arrangement in the ordinary course of business) between a listed company and any other person, the purpose and effect of which is to benefit a related party.

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8.1.8 G A related party transaction includes the variation or novation of an
existing agreement between the listed company and a related party, regardless of whether the party was a related party at the time the original agreement was entered into. Meaning of ‘transaction’ or ‘arrangement’
8.1.9 R A reference in this chapter:
(1) to a transaction or arrangement by a listed company includes a transaction or arrangement by its subsidiary undertaking; (2) to a transaction or arrangement is, unless the contrary intention appears, a reference to the entering into of the agreement for the transaction or the entering into of the arrangement; and (3) to a transaction or arrangement includes a transaction or arrangement which amends or revises the terms of an existing transaction or arrangement. Transactions to which this chapter does not apply
8.1.10 R UKLR 8.2.1R to UKLR 8.2.5R do not apply to a related party transaction
if it is a transaction or arrangement:
(1) of a kind referred to in paragraph 1 of UKLR 8 Annex 1 (a transaction the terms of which were agreed before a person became a related party); or (2) of a kind referred to in paragraphs 2 to 8 of UKLR 8 Annex 1 and does not have any unusual features. Definition of ‘related party’
8.1.11 R In UKLR, a related party means:
(1) a person who is (or was within the 12 months before the date of the transaction or arrangement) a substantial shareholder; (2) a person who is (or was within the 12 months before the date of the transaction or arrangement) a director or shadow director of:
(a) the listed company; or
(b) any other company which is one of the following (and, if that person has ceased to a director or shadow director, any other company which was one of the following while that person was a director or shadow director of such other company); (i) a subsidiary undertaking of the listed company;

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(ii) a parent undertaking of the listed company; or (iii) a fellow subsidiary undertaking of a parent undertaking of the listed company; (3) a person exercising significant influence; or (4) an associate of a related party referred to in paragraph (1), (2) or (3). Definition of ‘substantial shareholder’
8.1.12 R In UKLR, a substantial shareholder means any person who is entitled to
exercise, or to control the exercise of, 20% or more of the votes able to be cast on all or substantially all matters at general meetings of:
(1) the company; or
(2) any company which is:
(a) a subsidiary undertaking of the company; (b) a parent undertaking of the company; or (c) a fellow subsidiary undertaking of a parent undertaking of the company.
8.1.13 G For the purposes of determining votes that are able to be cast at general
meetings of a company, voting rights attached to shares which are not listed shares, including specified weighted voting rights shares, should be taken into consideration.
8.1.14 R For the purposes of calculating voting rights in UKLR 8.1.12R, the
following voting rights are to be disregarded:
(1) any voting rights which such a person exercises (or controls the exercise of) independently in its capacity as:
(a) bare trustee;
(b) investment manager;
(c) collective investment undertaking; or
(d) a long-term insurer in respect of its linked long-term business, if no associate of that person interferes by giving direct or indirect instructions, or in any other way, in the exercise of such voting rights (except to the extent any such person confers or collaborates with such an associate which also acts in its capacity as investment

FCA 2024/23 manager, collective investment undertaking or long-term insurer); or (2) any voting rights:
(a) which a person may hold (or control the exercise of) solely in relation to the direct performance, by way of business, of:
(i) underwriting the issue or sale of securities; (ii) placing securities, where the person provides a firm commitment to acquire any securities which it does not place; or (iii) acquiring securities from existing shareholders or the issuer pursuant to an agreement to procure third-party purchases of securities; and (b) where the conditions in (i) to (iv) are satisfied:
(i) the activities set out in (2)(a) are performed in the ordinary course of business; (ii) the securities to which the voting rights attach are held for a consecutive period of 5 trading days or less, beginning with the first trading day on which the securities are held; (iii) the voting rights are not exercised within the period in which the securities are held; and (iv) no attempt is made directly or indirectly by the firm to intervene in or exert influence on (or attempt to intervene in or exert influence on) the management of the issuer within the period the securities are held. Meaning of ‘ordinary course of business’
8.1.15 G (1) The assessment of whether a transaction is in the ordinary course
of business under this chapter will depend on the specific circumstances of the listed company. (2) Factors that may indicate whether a transaction is in the ordinary course of a company’s business include:
(a) the size and incidence of similar transactions which the company has entered into;

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(b) the nature and size of the company’s existing business and common factors within the industry sector in which it operates; (c) the company’s corporate strategy for its business, including in relation to growth and industry focus, as set out in the company’s latest published prospectus or annual financial report; (d) the existing accounting treatment (for a disposal) or planned accounting treatment (for an acquisition or new arrangement) by the listed company; and (e) whether its shareholders could reasonably expect the company to enter into the transaction, taking into account:
(i) the factors in (a) to (d);
(ii) any further information that the company has already notified to a RIS; (iii) the subject matter of the transaction; (iv) the terms of the transaction; (v) the anticipated impact on the listed company; and (vi) the associated benefits and risks.
8.1.16 G Transactions that are likely to be in the ordinary course of business
include:
(1) regular trading activities (if the company is a trading company); (2) ongoing commercial arrangements and purchases commonly undertaken as part of the existing business or within the industry sector in which the company operates; (3) capital expenditure to support and maintain the existing business and its infrastructure; (4) capital expenditure to add scale to the existing business in line with the company’s business strategy as previously notified to a RIS (including, for example, within the latest published prospectus or annual financial report); or (5) in the case of a listed property company, where the accounting treatment of a property that is acquired or disposed is such that:
(a) for an acquisition, the property will be classified as a current asset in the company’s published accounts; or

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(b) for a disposal, the property was classified as a current asset in the company’s published accounts.
8.1.17 G Transactions that are unlikely to be in the ordinary course of business
include:
(1) mergers with, or acquisitions of, other businesses (whether structured by way of a share or asset acquisition); (2) transactions that would lead to a substantial involvement in a business activity that did not previously form a significant part of the listed company’s principal activities; (3) transactions that would lead to the listed company no longer having a substantial involvement in a business activity that forms a significant part of its principal activities; or (4) transactions which are entered into to alleviate financial difficulty.
8.1.18 R For the purposes of this chapter, a transaction in the ordinary course of
business excludes a reverse takeover.
Where a related party transaction is also a significant transaction or other transaction under UKLR 7
8.1.19 G Where a related party transaction is also a significant transaction or is
otherwise subject to UKLR 7, the requirements and guidance under UKLR 7 also apply, in addition to the requirements under this chapter.
8.2 Requirements for related party transactions
General requirements for related party transactions
8.2.1 R If a listed company enters into a related party transaction where any
percentage ratio is 5% or more, the listed company must:
(1) obtain the approval of its board for the transaction or arrangement before it is entered into; (2) ensure that any director who is, or an associate of whom is, the related party, or who is a director of the related party, does not take part in the board’s consideration of the transaction or arrangement and does not vote on the relevant board resolution; (3) before entering into the transaction or arrangement, obtain written confirmation from a sponsor that the terms of the proposed transaction or arrangement with the related party are fair and reasonable as far as the security holders of the listed company are concerned; and

PS24/6: Primary Markets Effectiveness Review: Feedback to CP23/31 and final UK Listing Rules

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