THE UK’s financial regulator yesterday announced a consultation exercise aimed at tightening up rules for premium listings, reverse takeovers and externally managed companies.
The consultation exercise follows a similar move by the FTSE Group, which runs the blue-chip FTSE 100 index.
The FTSE Group said it was tightening rules governing entry to its indices in order to protect minority investors and stop companies with poor corporate governance from exploiting loopholes.
FTSE said companies that want to be included in its UK indices -- including the FTSE 100 -- must ensure at least 25 per cent of their shares are freely tradeable.
Several foreign-owned natural resources companies whose stock is listed in London have the majority of their shares controlled by two or three powerful individuals. This has led to criticism from a number of institutional shareholders.
The last Russian-owned company to float in London, Ruspetro, has a 40 per cent free float, leading many to hope that this might be the norm for companies wishing to join the market in the future.
The FSA said externally managed companies lessen the ability of shareholders to hold the real management of a company to account.
On the issue of free floats, the FSA’s David Lawton said yesterday: “It is important that the Listing Rules continue to keep pace with market developments.”