Regulator toughens up on listing rules

The Financial Conduct Authority (FCA) has beefed up its listing rules to provide greater protection for minority shareholders. The regulator confirmed shareholders in premium listed companies are to be given additional voting rights and greater influence over decisions.

David Lawton, the FCA’s director of markets, said:

Active engagement by all shareholders is essential to make markets work well. By safeguarding minority interests from abuse by controlling shareholders, these changes will promote market integrity and empower minority shareholders to hold the companies they invest in to account.

The new rules come in response to a consultation conducted by the FCA in October 2012. The purpose of the consultation was to hear concerns about the governance of premium listed companies with a controlling shareholder.

The new regulations include measures to ensure that listed companies are run independently of their controlling shareholders. Independent shareholders will be given a veto over transactions between listed companies and a controlling shareholder when independence is threatened.

Separate approval of independent directors will need to be given by independent shareholders as well as gaining approval from shareholders as a whole.

Voting power also will be increased for minority shareholders when a company with a controlling shareholder attempts to cancel its listing or remove shareholders' rights. The FCA will also be requiring greater transparency for listed companies.