What’s changing?

The concept of a Class 2 transaction will be removed from the UK Listing Regime.  The current requirement to publish an announcement and disclose prescribed information will no longer apply when a listed company enters into a transaction where any percentage ratio under the class tests is between 5% and 25%.

The FCA's detailed proposals are set out in CP23/31: Primary Markets Effectiveness Review: Feedback to CP23/10 and detailed proposals for listing rules reforms (fca.org.uk) published on 20 December 2023. This follows the publication of CP23/10: Primary Markets Effectiveness Review: Feedback to DP22/2 and proposed equity listing rule reforms (fca.org.uk) in May 2023.

What are the current requirements?

Currently a listed company with a premium listing must notify a Regulatory Information Service as soon as possible after the terms of a Class 2 transaction are agreed. This requirement is contained in LR 10.4.1R.

The notification must include:

  • details of the transaction, including the name of the other party to the transaction;
  • a description of the business carried on by, or using, the net assets the subject of the transaction;
  • the consideration, and how it is being satisfied (including the terms of any arrangements for deferred consideration);
  • the value of the gross assets the subject of the transaction;
  • the profits attributable to the assets the subject of the transaction;
  • the effect of the transaction on the listed company including any benefits which are expected to accrue to the company as a result of the transaction;
  • details of any service contracts of proposed directors of the listed company;
  • for a disposal, the application of the sale proceeds;
  • for a disposal, if securities are to form part of the consideration received, a statement whether the securities are to be sold or retained; and
  • details of key individuals important to the business or company the subject of the transaction.

There is also an ongoing notification requirement which is triggered if a significant change or significant new matter arises.

Next steps

The FCA intends to gather views on the proposals until late March 2024 with a view to publishing final rules in the second half of 2024.

How can we help?

 If you would like to discuss the changes to the UK Listing Regime, please speak to your usual contact at Burges Salmon or Nick Graves, head of the firm's Corporate Group.