FCA Continues Its Push for a More Competitive Market, What Do You Need to Know?

The Financial Conduct Authority (“FCA”) has introduced a series of reformative measures in recent years, and some of these changes highlight the FCA’s boldest effort to reform the UK capital markets framework in nearly three decades.
These moves represent key changes designed to create a more flexible and competitive capital market, enabling London to compete more effectively with other global financial hubs such as New York and Hong Kong. The reforms include streamlined categorization for equity shares, changes to approval processes, increased issuer responsibility, and more flexibility for IPOs and fundraising.
CP 23/31
The changes proposed under CP23/31 came into force on 29 July 2024. They collapsed the traditional premium and standard segments for equity shares into a simplified category known as ESCC (Equity Shares in Commercial Companies). The ESCC rules are largely based on the traditional premium segment regime, while certain eligibility criteria and continuing obligations have been removed or simplified.
You may find details of CP23/31 here, and the relevant feedback and FAQs here.
The market has described this reform as the “most far-reaching in three decades”. In summary, the key changes include:

• Shareholder approval for significant transactions involving 25% or more under any class test has been removed. However, enhanced disclosure regarding the transaction and its expected impact remains required.

• Reverse takeovers and certain other transactions continue to require shareholder approval.

• Shareholder approval for related party transactions has also been removed, although other safeguards remain in place.

• Certain premium segment eligibility requirements have been relaxed, and companies now have greater flexibility to adopt dual class share structures.

• The sponsor regime has been retained, but sponsors will have a role in fewer transactions, including:
  o Transactions involving new share issuances accompanied by a prospectus
  o Proposed reverse takeovers
  o Situations where sponsors must continue to provide a “fair and reasonable opinion” regarding large related party transactions
  o Transfers into or out of the ESCC category
  o Circumstances where an issuer seeks individual guidance from the FCA, or requests a modification or waiver of the Listing Rules

• Companies with controlling shareholders are no longer required to maintain a controlling shareholder agreement. However, they must continue to demonstrate independence through disclosures and director challenge mechanisms.
  It is worth noting that the current governance of annual and interim financial reports under the Disclosure Guidance and Transparency Rules remains unchanged.
  PS 25/9 and CP 25/35
  In 2025, the FCA issued a policy statement introducing new FCA rules for the UK prospectus regime. This new regime will come into effect on 19 January 2026, subject to transitional provisions.
  Together with the streamlined categorization of equity shares discussed above, these reforms form part of a broader capital markets reform program for one of the world’s leading financial centers.
  Significant changes include:

• For companies on regulated markets such as the Main Market, the annual exemption threshold for further admissions of the same class of securities will increase from 20 percent to 75 percent.

• For closed-ended investment funds, the relevant threshold will increase to 100 percent.

• The content requirements for equity IPO prospectuses remain largely unchanged, although targeted amendments have been introduced in areas such as climate-related disclosures and the summary section.

• The minimum offer period for an IPO public offer following publication of the prospectus will be reduced from six working days to three working days.

• The FCA has adopted a lighter-touch approach to MTF admission prospectuses for primary MTFs such as AIM, limiting mandatory MAP production to initial admissions and re-admissions following certain significant acquisitions.

• Forward-looking information may benefit from the protected forward-looking statements regime where it qualifies, although required prospectus disclosures will generally be excluded from that definition, subject to limited exceptions.
  It is also noteworthy that the FCA subsequently issued CP 25/35, which proposes a separate package of technical amendments and process improvements intended to streamline and simplify the admission of securities to listing.
  What do these changes mean?
  Certainly, these reforms reduce the complexity of approval requirements for capital markets transactions and streamline various processes, while offering greater flexibility for companies seeking to list in London or conduct transactions under the relevant regulatory framework.
  However, these reforms should not be viewed as simple deregulation.
  As the consultation papers and policy statements make clear, the importance of timely and compliant disclosure has increased, while sound board judgment is becoming increasingly important for companies seeking to remain compliant under the reformed UK framework.
  As a result, while the reforms may reduce procedural burdens in certain areas, they may also increase the burden on companies to adapt their existing compliance structures to new regulatory expectations.
  What do we offer?
  Finiti Legal is ideally positioned to assist companies in navigating the rapid pace of regulatory change in the UK.
  As a professional AI-driven platform designed to help legal teams comply with regulatory requirements across major capital markets, Finiti Legal enables companies and lawyers to navigate policy changes with minimal additional effort, helping them adopt new requirements quickly, efficiently, and confidently.