FRESNILLO shares slumped more than 10 per cent yesterday after index provider FTSE said it would make companies list at least a quarter of their share capital on the London Stock Exchange before they could gain a place in its sought-after indices.
FTSE raised its threshold for the minimum level of free float offered by UK-domiciled firms to 25 per cent after index users complained that overseas groups with opaque governance were listing tiny amounts of their shares to get into the FTSE 100.
But only five listed groups will be affected by the new rule – miners ENRC, Fresnillo, Evraz and Ferrexpo plus oil and gas firm Essar Energy – and investors said the move was unlikely to tackle governance issues.
George Dallas, head of governance at F&C Asset Management, said the new threshold “is a positive step but a bare minimum compared to what should be the case”.
The companies affected, all of which have around 20-23 per cent free float, were among the worst fallers on the FTSE 100, with Essar down 6.6 per cent and ENRC off by 5.6 per cent.
FTSE said 83 per cent of respondents backed a 25 per cent free float. Respondents also suggested giving firms that fall short either one or two years to meet the new rule.
FTSE chief executive Mark Makepeace said respondents had not had clear views on how to change the index rules to include only firms with good governance. “There were a lot of views but no solutions,” he said.