FCA proposals to loosen listing rules as the UK tries to attract Saudi Aramco to IPO in London have come under fire for failing to protect minority shareholders.
The regulator announced this week that a sovereign controlling shareholder would not be considered a related party for the purposes of the UK listing rules and that controlling shareholder rules would not apply to companies in the new category.
Saudi Arabian-controlled Aramco is currently considering where to IPO in a deal that could value the oil major anywhere between $400bn and $2trn.
But Investment Association chief executive Chris Cummings says the FCA attempts to accommodate sovereign-controlled companies threaten key investor protections.
“A premium listed segment without these investor protections is not a premium segment and will not provide the protections that investors expect,” Cummings says.
Royal London Asset Management corporate governance manager Ashley Hamilton Claxton says amending existing rules for one company is not an effective strategy for regulating the market as a whole.
“If the proposals in this consultation document are implemented, it will be bad news for London and will reverse the progress we have made in recent years to uphold strong governance and protect minority shareholders.”
Claxton says the listing rules should apply for any premium listing, regardless of whether the controlling investor is a private individual, a consortium or a sovereign state.
Nicholas Holmes, equity capital markets partner at law firm Ashurst, says the assertion by FCA chief executive Andrew Bailey that sovereign owners have different motivations from private sector individuals or companies is not reason enough to dilute the existing rules.
“It is not necessarily the case that these motivations are any less in need of proper control and scrutiny. The risk is a dilution of the premium listing brand.”