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Governance in brief — FCA to strengthen the listing rules to enhance protection for minority shareholders

Published on: 21 Nov 2013

This publication from Deloitte discusses the Financial Conduct Authority (FCA) consultation paper setting out a package of measures designed to protect minority shareholders in premium listed companies.  These measures have arisen as a result of concerns from the investment community about the governance of premium listed companies with a controlling shareholder and protecting the interests of minority shareholders. Much of the concern was whether the minority shareholders could participate effectively in the governance of the company where the interests of the controlling shareholder conflict with those of the minority.

The new rules would give minority shareholders in premium listed companies additional voting rights and greater influence over key decisions.  Some of the measures are near-final rules based upon the proposals contained within a consultation (CP12/25) by the FCA's predecessor, the Financial Services Authority (FSA) in October 2012.  There are other proposals to which comments are sought in the consultation.

Near rules on which no new comments are being sought:

  • Placing a requirement on the interaction between a premium listed company and a controlling shareholder via a mandatory ‘agreement’.
  • Providing additional voting power for minority shareholders when electing independent directors where a controlling shareholder is present by requiring that they must be separately approved both by the shareholders as a whole and the independent shareholders as a separate class.  

New proposals on which comments are being sought:

  • A new definition of "controlling shareholders".
  • Minority shareholders to be given enhanced oversight if rules on controlling shareholders are not complied with.
  • Enhancing voting power for the minority shareholders where a company with a controlling shareholder wishes to cancel its premium listing.

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