New UK Listing Rules - Non-equity securities
18 July 2024
Key points
- Significant changes with regard to the listing of equity securities
- Modest impact only with regard to the listing of non-equity securities
- Board declaration is required, but softened from the original proposal
Background
On 11 July 2024 the FCA published Policy Statement PS24/6 (Primary Markets Effectiveness Review: Feedback to CP23/31 and final UK Listing Rules) in which it set out its final rules for a new, simplified UK listing regime taking effect from 29 July 2024. These reforms, which follow from the UK Listings Review launched in November 2020, are billed by the FCA as the most significant changes to the UK’s listing regime in over three decades. However, while there are important changes as regards equity securities, the impact with regard to non-equity securities will be far more modest.
Equity securities
There are a number of key reforms with regard to the listing of equity securities including the replacement of the current premium and standard listed share categories with a single category for commercial companies. For more information, see this Ashurst briefing.
Change of form but not substance in respect of non-equity securities
New "UK Listing Rules" sourcebook (UKLR)
The new rules will not make any material changes to the listing rules for non-equity securities, nor for the majority of other standard listed instruments (for example, depositary receipts). However, the new rules are being given effect through the replacement of the current Listing Rules sourcebook in the FCA Handbook by an entirely new sourcebook: the "UK Listing Rules" sourcebook (UKLR).
Re-ordering of familiar provisions
For listings of securities other than shares there is nothing very significant in the new rules other than some re-ordering of familiar provisions. The new UK Listing Rules sourcebook will include:
- rules for dealing with the FCA and publishing information (UKLR 1);
- listing principles that apply to all listed issuers (UKLR 2);
- rules for debt and debt like securities (UKLR 17) which are not materially different from those currently found in LR 17;
- rules for securitised derivatives (UKLR 18) which are not materially different from those currently found in LR 19;
- rules for warrants, options and other miscellaneous securities (UKLR 19) which are not materially different from those currently found in LR 20;
- rules for all categories of securities governing the process for admission to listing (UKLR 20);
- rules for all categories of securities governing suspension, cancellation, restoration and transfer between listing categories (UKLR 21); and
- rules for listing particulars relating to listing applications for debt securities on the Professional Securities Market (UKLR 23).
Board declaration
The one aspect of the new rules proposed under PS24/6 which has caught the attention of issuers of non-equity securities is the requirement for a formal confirmation by the board of directors of the issuer to confirm that the issuer has established adequate procedures, systems and controls to enable it to comply with its obligations under the UKLRs and other rules. Whilst this requirement has been carried forward from PS24/6, there are two welcome amendments to the original proposal in relation to the form and timing in the final rules:
- Form: the declaration has been softened and only requires a reasonable basis rather than an absolute commitment to the requisite standards. This confirmation must be provided using a specified form (see UKLR 20.3.1 R) which must be signed by a member of the board of directors; and
- Timing: the declaration will only be required at the point of listing (i.e. not for subsequent applications). That is to say that the confirmation is only required on the first occasion on which an issuer makes an application for an admission of securities to listing. Accordingly, an issuer with any securities already admitted to listing is not required to provide the confirmation.
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