Plans to ease listing requirements to attract oil titan Saudi Aramco to London from the Financial Conduct Authority (FCA) will come under renewed scrutiny this week as MPs question the watchdog’s boss.
FCA boss Andrew Bailey will face questions on the plans on Tuesday from the Treasury Select Committee. The committee’s head, former Cabinet minister Nicky Morgan, has already publicly expressed concerns on the plans.
Securing the Aramco listing has been described as a major statement of intent for the UK’s international ambitions as it prepares to leave the EU. Competition for the listing, for which the Saudi state hopes to gain a $2 trillion (£1.5 trillion) valuation, is thought to come from New York and Hong Kong, although earlier this month the Financial Times reported a private share sale might be preferred.
Multiple industry bodies, including the Investment Association, the Institute of Directors, and the International Corporate Governance Network, have strongly objected to the proposals for easing restrictions which are designed to preserve the strength of corporate governance on the London market.
The restrictions include allowing sovereign owners such as Saudi Arabia to escape “related party” designation, meaning the company would be able to engage in a transaction with the Saudi government without shareholder consent.
Another controversial aspect is the relaxation of the requirement for firms to list at least a quarter of shares. Current public plans are only for a five per cent listing.
The Sunday Times today reported the FCA has given indications to investors it could retreat from some of the proposals.
Some of the investors and industry groups will meet with the regulator in the coming weeks to discuss their objections to the listing, although a firm timetable has not yet been drawn up by the FCA.
An FCA spokesperson said: “It is normal for the FCA to meet interested parties to discuss responses to our consultations as part of the next stage of the process.”
The FCA has said it will publish a policy statement outlining any changes at some point in the fourth quarter of this year.
At the Treasury Select Committe Bailey will also likely answer questions on the suppressed report into Royal Bank of Scotland's Global Restructuring Group and the status of women in finance.