Britain wants to loosen rules on listing state companies, a move that critics say is designed to help London win the IPO of Saudi Arabian oil giant Saudi Aramco but could weaken minority investor protection.
The Financial Conduct Authority’s proposals yesterday would create a new listing category for companies controlled by sovereign states and come as exchanges around the world are vying to win the Aramco listing, which is expected to be the largest initial public offering (IPO) ever.
But they met with criticism from British fund managers, who have already expressed concerns about Aramco’s governance.
“Investors believe, a premium listed segment without these investor protections is not a premium segment and will not provide the protections that investors expect,” Chris Cummings, chief executive at the Investment Association said.
Reuters reported earlier this year that the London Stock Exchange Group was working on a new type of listing structure that would make it more attractive for Aramco to join the bourse.
“No decision has been made on the venue yet,” a source close to Aramco told Reuters yesterday following the proposals, which come as the government and City of London are trying to keep Britain’s financial markets attractive to international investors and companies after it leaves the European Union.
The FCA said yesterday it is proposing a new “premium” stock market listing category that will exempt companies controlled by sovereign states from certain requirements and be available to companies listed in London using depositary receipts, financial instruments used to represent a foreign company’s shares, rather than the shares themselves.
International companies including Russian state firms Gazprom and Rosneft are listed using depositary receipts on the LSE.
“Refining the listing regime in this way would make UK markets more accessible whilst ensuring that the protections afforded by our premium listing regime are focused and proportionate,” FCA chief executive Andrew Bailey said. Ashley Hamilton Claxton, corporate governance manager at Royal London Asset Management said this may reverse progress made on governance and protecting minority shareholders.
“It looks like the FCA is consulting on amending the existing listing rules to accommodate the peculiarities of one company, which is not a very effective strategy for regulating the market as a whole,” Hamilton Claxton said.

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