Global investors warn UK on overhaul of listing rules

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Global investors are warning that a proposed overhaul of listing rules to attract more growth companies to the UK market will erode shareholder rights, undermine the country’s reputation for corporate governance and harm its attractiveness as a financial centre.

The International Corporate Governance Network, a group of global institutional investors with $77tn of assets under management, has written to UK chancellor Jeremy Hunt and to the Financial Conduct Authority regulator — which drew up the planned changes — criticising what the FCA has called “the most far-reaching reforms in the UK’s listing regime in three decades”.

Recipients also included the Financial Reporting Council accounting watchdog and the London Stock Exchange.

“We are concerned that the suggested reforms to the listing rules would result in weaker investor protection and could harm the UK’s reputation as a market with high corporate governance standards,” said signatory Carine Smith Ihenacho, chief governance and compliance officer at Norges Bank Investment Management, which runs the world’s biggest sovereign wealth fund.

Among the letter’s signatories are some of the world’s most powerful institutional investors, including NBIM, and large US pension funds Calpers and Calstrs; PGGM, one of the largest Dutch pension fund managers; and AustralianSuper, the country’s largest pension fund. More than three-quarters of the assets they represent are based outside of the UK.

The FCA’s proposals are a response to government concerns about the decline in the number of initial public offerings in London.

A 2021 UK listings review chaired by Lord Jonathan Hill highlighted the need to encourage more companies to list in the UK amid an exodus from the LSE and a two-decade decline in UK pension funds’ share of the domestic equity market.

The FCA called for…