UK Stock Market Rules Shake Up...11 Jul 2024 14:39
Chief among the changes is a removal of the need for shareholders to vote on significant transactions and so-called 'related party transactions' where a company enters an arrangement with another company with which it already has a business relationship. This change effectively hands more power to company boards and takes it away from investors.
The previous need for a vote on 'related party' transactions was thought to be a key reason why Arm Holdings decided against a London listing.
Advertisement
A second change is that founders or directors of a company can have 'dual' or enhanced voting rights for an unlimited period. This brings the UK more into line with the United States - where such arrangements are common.
The aim here is to attract more growth companies, particularly in the tech sector, where founders want to retain control after the business comes to market. Similarly, institutional investors who backed a company prior to its stock market flotation will be allowed to enjoy enhanced voting rights for up to 10 years.
A third change will sweep away so-called 'premium' and 'standard' listings and replace them with a single category for equities. The premium listing, which required companies to adhere to stricter rules and standards, was at the centre of a push seven years ago to attract Saudi Aramco, the world's biggest oil producer, to list in London. A number of fund managers opposed the rules being bent to allow Aramco a premium listing which, had it listed in London, would have entitled it to FTSE 100 membership.
Sign In
Follow the stocks
