Legal and regulatory developments 2024

“Momentum for UK capital markets reform continued throughout 2024 and a significant milestone was reached in July with the implementation of a radically revised listing regime. We are now heading towards the final stages of the current reform process - kickstarted in 2021 by Lord Hill's Listing Regime Review - with the FCA on track to publish the overall rules for the new public offers and admissions to trading regime by the end of H1; developments relating to key recommendations of the UK Secondary Capital Raising Review are also expected in the near term. Whilst regulatory reform is just one piece of the puzzle, this bold overhaul is an important step towards reinvigorating UK capital markets activity and, ultimately, enhancing London's status as a global financial centre.”
Marianna Kennedy, Senior Associate, Ashurst LLP

FCA reform of the UK listing regime finalised

On 29 July 2024, the fundamental restructuring of the UK listing regime aimed at making the London capital markets more competitive came into effect. This included the creation of a new UK Listing Rules (UKLR) sourcebook and the introduction of several new listing categories based on issuer and security type.

Central to the reforms, was the creation of a single listing category for equity shares in commercial companies and the removal of the premium and standard listing segments. The commercial companies category is a more disclosure-based regime with greater flexibility to attract a diverse range of companies.

Some of the key features of the new commercial companies category are:

  • eligibility requirements are simplified with no requirements relating to historical financial information, minimum track record, control of the business or a clean working capital statement although a prospectus required for an issuer seeking admission of its equity shares to a regulated market will need to contain historical financial information and a working capital statement,
  • companies with a controlling shareholder will be required to demonstrate that they can carry on business independently from the controlling shareholder but there is no requirement for a written relationship agreement to be put in place,
“We note that the requirement for a relationship agreement was removed but we expect this is not necessarily the death of the relationship agreement, as having one in place provides more certainty to the parties involved in identifying and managing the relationship and provides comfort to the sponsor that the Listing Rules are being complied with in this regard.”
Clive Hopewell, Partner, Bird & Bird LLP
  • dual/multiple class share structures are permitted with more permissive features than applied to the previous premium listing category and a mandated time-related sunset requirement to limit the exercisability of enhanced voting rights is only required for enhanced voting rights shares held by pre-IPO institutional investors,
  • a disclosure-based regime for significant transactions at the former class 1 threshold of 25% requiring the issuer to make enhanced notifications, but with no mandated working capital statement or re-stated historical financial information. No shareholder approval, circular or sponsor required. The profits test has been removed from the class tests,
  • a disclosure-based approach to related party transactions at the 5% threshold including the  requirement for a sponsor’s ‘fair and reasonable’ statement. No shareholder approval or circular required. An increase in the threshold at which a shareholder becomes a related party from 10% to 20%,
  • comply or explain against the UK Corporate Governance Code, reporting on climate and diversity maintained

Other new listing categories include:

  • International commercial companies secondary listing: a listing category for equity shares of overseas companies seeking a secondary listing in the UK,
  • Transition: a transitional category for commercial companies which previously had a standard listing of equity shares (and were not eligible for any other listing category), giving them time to adapt and move to the commercial companies or another category. Closed to new applicants and transfers from other categories, and
  • Shell companies and SPACs: largely based on the previous standard listing requirements  with tailored modifications. Provisions which allow large SPACs to avoid suspension of listing when a potential acquisition is announced if certain specific investor protections are in place have been carried over

The FCA also published policy statement PS24/6 in July 2024 setting out feedback on the listing rules reform consultation in CP23/31.

For full information see Practice Notes: Reform of the UK listing regime-fundamentals and UK Listing Review - progress tracker.

Reform of the public offers and admissions to trading regime

The Public Offers and Admissions to Trading Regulations 2024 (POATRs) became law on 29 January 2024 and set out a new framework for regulating public offers of securities and admissions to trading which will in time replace the UK Prospectus Regulation.

The POATRs provide the FCA with enhanced rule making powers relating to admissions to a UK regulated market and when a prospectus is required. They also contain a general prohibition on offers of relevant securities to the public which is subject to a number of exemptions. Most of the current exemptions in the UK Prospectus Regulation which relate to the requirement to produce a prospectus in relation to a public offer are carried forward as exemptions to the prohibition on public offers. There are also key new exemptions, such as an offer of securities in conjunction with an admission to trading on a UK regulated market or multilateral trading facility (MTF),  an offer of securities to existing shareholders and an offer made by means of a regulated ‘public offer platform’.

The FCA published consultation paper CP 24/12 in July 2024 setting out its proposed rules for companies seeking to admit securities to a UK regulated market or a ‘primary’ MTF under the powers it received in the POATRs. This was followed up with some further proposals in CP25/2 published on 31 January 2025.

The proposed FCA rules on public offers and admissions to trading include the following features:

  • a prospectus will be required for an initial admission of transferable securities to trading on a UK regulated market;
  • the threshold for triggering a prospectus for further issues to be increased from 20% to 75% of existing issued share capital;
  • a reduced liability will attach to ‘protected forward looking statements’ (PFLS) in a prospectus;
  • an MTF admission prospectus will be required for initial admissions to trading on a primary MTF but not for further issues.

The FCA also published consultation paper CP24/13 in July 2024 on its proposed rules for the new public offer platform regime and some follow up proposals in CP25/3 on 31 January 2025.

For full details see Practice Note: UK prospectus regime reform.

Private Intermittent Securities and Capital Exchange System (PISCES)

Following a consultation launched in March 2024, the government published a consultation response and draft statutory instrument relating to PISCES on 14 November 2024. PISCES is a new type of regulated trading platform that will provide for intermittent trading of private company shares.

It is being created pursuant to a financial market infrastructure sandbox which allows the government to test how to adapt the legislative framework to ensure it evolves in accordance with developing technologies and practices.

PISCES will operate as a secondary market only and will not provide for capital raising through new issues of shares. Only certain investors will be able to buy shares on PISCES (eg institutional investors, employees) and it will not be generally open to the public.

On 17 December 2024 the FCA published a consultation CP24/29 on the regulatory framework for PISCES including a draft new sourcebook, the PISCES Sourcebook (PS).

“Reform to the Prospectus Regime seeks to improve the efficiency of public capital raising and make regulation in this area more agile and dynamic; with the FCA to have enhanced rulemaking responsibilities to specify when a prospectus is required and its content requirements. Current proposals to increase the threshold requirement to publish a prospectus to 75% of the issued share capital would significantly reduce the time and cost involved in secondary offerings.”
Jayson Marks, Partner, Squire Patton Boggs (UK) LLP
“AIM and AQSE Admission Documents would be 'rebadged' as Prospectuses for all initial listings and reverse takeovers. This means that they will be subject to the same statutory responsibility and compensation provisions as Prospectuses, including withdrawal rights, but content requirements will be unchanged, and will be set by the market operators.

This will enable retail investors to participate in an AIM or AQSE IPO fundraising.

The aim is to reduce the barriers to investor participation, particularly with respect to public offers – this may encourage issuers to include retail investors in offers by default, thereby leading to wider participation in the ownership of public companies."
Clive Hopewell, Partner, Bird & Bird LLP
“In a market where companies are staying private for longer, there has been an increased blending of private market and public market practices and mechanics. PISCES represents an innovative approach to strengthening the UK funding continuum which will certainly be an interesting development to keep an eye on particularly as UK pension funds need to find more innovative and attractive options to funnel investments into “unlisted equities” further to the UK government’s Mansion House reforms.”
Ariel White-Tsimikalis, Partner, Goodwin Procter (UK) LLP
“PISCES’s innovative structure has potential, and it is encouraging to see the UK government and regulators thinking outside the box when it comes to implementing strategy to reform and reinvigorate UK capital markets.”
Tom Coulter, Partner, Travers Smith
“HM Treasury hope that PISCES will improve the interface between private companies and UK public markets. PISCES will offer buy-side investors new opportunities for assessing private companies and may also become a stepping stone towards a public listing.”
Nina Driver, Practice Development Lawyer, Squire Patton Boggs (UK) LLP

Enhancements to the National Storage Mechanism (NSM)

The FCA published policy statement PS24/19: Enhancing the National Storage Mechanism on 20 December 2024 (following consultation CP24/17 published earlier in the summer) with final rules and guidance intended to make it easier for users to find regulated information on the NSM. The changes involve amendments to the Disclosure Guidance and Transparency Rules (DTR).

Specific changes include expanding the requirement for the filing of legal entity identifiers and updating the headline information that is used to categorise regulated information.

The changes come into force on 3 November 2025.

Updated guidance in the FCA Knowledge Base

A number of updates to guidance in the FCA Knowledge Base were published in 2024 in FCA Primary Market Bulletin (PMB) publications:

  • PMB 48 (April 2024) confirmed technical note changes to sponsor competence and consulted on changes to a number of technical notes to reflect changes to the listing regime,
  • PMB 50 (July 2024) consulted on new technical notes relating to the sponsor regime,
  • PMB 51 (September 2024) finalised amendments to certain technical notes on the sponsor regime and non-sponsor related topics, introduced one new technical note on the sponsor regime and deleted nine technical notes on non-sponsor topics, and
  •   PMB 53 (December 2024) re-consulted on two technical notes originally consulted on in PMB 48 and finalised three technical notes on the sponsor regime, consulted on new proposed amendments to 43 technical and procedural notes and consulted on some deletions of guidance

FCA guidance on applying aspects of the UK Market Abuse Regulation

In November 2024 the FCA published PMB 52 which addresses, among other things:

  • inside information in three common scenarios: offer processes, preparation of periodic financial information and CEO resignations and appointments,
  • communicating information during shareholder calls or meetings and using communication apps to interact with groups of smaller private shareholders, and
  • the dissemination of regulatory information by issuers during interruptions to Primary Information Provider services (following observations during the July 2024 Crowdstrike-related IT outage)

FCA fines PDMR for trading shares during closed period

In November 2024, the FCA published a Final Notice fining a former person discharging managerial responsibility (PDMR) for trading listed company shares during closed periods before the announcement of the company’s financial results and failing to notify the FCA and the company of the trades within the required three business day period.  This constituted a contravention of Articles 19(1) and 19(11) of the EU Market Abuse Regulation.

FCA new rules on payment optionality for investment research

The Investment Research Review published in July 2023 set out a series of recommendations to improve the investment research market, including creating the option for paying for research using combined payments for trade execution and research.

Following a consultation published in April 2024, the FCA published policy statement PS24/9 in July 2024 setting out final rules giving buyside firms (asset managers and others) greater flexibility on how they can purchase investment research by introducing  joint payments for third-party research and execution services, provided the firm meets the requirements. The new rules came into force on 1 August 2024.

UK Corporate Governance Code 2024

“Listed companies adopting the UK Corporate Governance Code should use the upcoming reporting cycles to develop and strengthen disclosures relating to risk management and internal controls in their annual report in advance of their 2026/27 reporting season. Many issuers are working towards creating full disclosure of their risk management and internal control framework in their FY25 annual report.”
Hannah Kendrick, Partner, Squire Patton Boggs (UK) LLP

The Financial Reporting Council (FRC) published a revised UK Corporate Governance Code (UKCG Code) in January 2024. The FRC made limited amendments to the UKCG Code but has addressed the important issue of internal controls.

The updated UKCG Code applies generally to accounting periods beginning on or after 1 January 2025 with the provisions on board declarations regarding internal controls coming into effect one year later on 1 January 2026.

Stewardship Code consultation

On 11 November 2024, the FRC launched a consultation on proposed updates to the UK Stewardship Code. The key proposals include amending the definition of stewardship, amending the reporting process, streamlining the principles for asset owners and managers, tailoring the service provider principles and, for the first time, including guidance to support signatories in demonstrating how they implemented stewardship.

Pre-Emption Group Monitoring Report

In November 2024 the Pre-emption Group published its second annual monitoring report on the use of its 2022 Statement of Principles by FTSE 350 companies in disapplying shareholder pre-emption rights. The report examines meetings held in the period 1 August 2023 to 31 July 2024. It shows that during this period, 224 companies in the FTSE 350 (67.1% of the sample) sought ‘enhanced’ authority to disapply pre-emption rights. Enhanced authority refers to a disapplication request which exceeds the authority previously allowed under the 2015 Statement of Principles.

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