FCA tightens listing rules to give minority shareholders more power

Minority shareholders in large companies are to be given more powers as the City regulator tightens listing rules in London.In a move which it hopes will "protect" small investors, the Financial Conduct Authority (FCA) has strengthened its listing rules to give shareholders "additional voting rights and greater influence" over key decisions.However, the new guidelines have drawn criticism: according to the Financial Times, lawyers in New York have warned that the amendments could hinder new initial public offerings in London.The FCA is responding to concerns from the investment community over the governance of premium-listed companies with a controlling shareholder. It assured that the voice of minority shareholders will strengthen "without turning minority protection into minority control".The new rules say that these companies must be run independently of their controlling shareholders, and the appointment of independent directors would have to be voted on by independent shareholders and also minority investors.The guidelines are aimed at preventing such corporate governance scandals as those seen at mining groups ENRC and Bumi which caused disputes between owners and other stakeholders after controversial transactions.The new rules will affect listed companies on the main market in London with a market capitalisation of over £700m and a controlling shareholder of 30% or more. It is thought that this will apply to around half of the FTSE 100 index, such as Sports Direct in which founder Mike Ashley controls 61.7%, and AB Foods in which Wittington Properties owns 54%.David Lawton, the FCA's Director of Markets said that "active engagement" by all shareholders is necessary to ensure 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," he said.BC