UK’s FCA adopts rules to help Aramco listing on LSE

The UK’s Financial Conduct Authority (FCA) has finalized rules creating a new category within its premium listing regime to cater for sovereign-owned companies, it said in a statement on Friday.

The new category, effective July 1, will pave the way for companies such as Saudi Aramco to list on the London Stock Exchange (LSE).

In July 2017, the watchdog first consulted on proposals aimed at encouraging such companies to choose the higher standards of premium listing, rather than standard listing.

Following the consultation, the FCA said it has finalized rules which include the election of independent directors to be subject to separate approval by independent shareholders and there be need for timely disclosures on transactions between the sovereign and the issuer.

“These rules mean when a sovereign-controlled company lists here, investors can benefit from the protections offered by a premium listing. This raises standards,” said FCA chief executive officer Andrew Bailey.

“The creation of a new category within the premium listing regime recognizes that the relationship between a sovereign-controlled company and the state that owns it is likely to be different from the relationship a company would have with a private controlling shareholder. In addition, more information is available on sovereign states than on any other type of controlling shareholder,” he added.

A premium listing in London would mean a float of at least 25 percent of a company’s shares, but the new category could support small floats.

Saudi Aramco plans to list about 5 percent of its shares, raising almost $100 billion from the initial public offering, which is now expected in 2019.