Britain's Financial Conduct Authority simplified regulations for listing entities controlled by overseas governments, citing the need for "appropriate ways of accommodating such companies, for example companies on the path to privatization." The move comes amid a race with exchanges in Hong Kong and New York to attract the initial public offering of Saudi Arabian Oil Co., or Aramco, possibly the largest company in the world. The energy giant is looking to sell up to 5% in the debut.
"This raises standards," said Andrew Bailey, FCA's chief executive. The changes are scheduled to be implemented on July 1. The relationship between a firm and the state that owns it is likely to be different from the relationship with a private controlling shareholder, regulators added and stressed "more information is available on sovereign states."
The new section in the premium listing category will be exempted from the obligation to get shareholder clearance for a transaction with the government, which won't be considered a related party, though the panel stressed such operations still require "timely disclosures" in accordance with market abuse regime rules. Independent directors will need to be elected by independent shareholders, FCA said, but allowed sovereigns to avoid a controlling shareholder agreement.
