New FCA rule grants early-stage voting control exemption for premium listing shareholders

BVWire–UKIssue #34-1
January 4, 2022

The Financial Conduct Authority (FCA) have introduced a targeted form of dual-class share structures (DCSS) that allow a class of premium shares to retain voting control over a listed company beyond the economic interest held by those shareholders. The new rule (Policy Statement PS21/22), which came into effect on 3 December 2021, expands control rights, and the value, of director-held premium shares compared to all other classes of shareholders.

The new DCSS aims to minimise the risk of unwanted takeovers during the first five-year period after a company’s initial listing. It exempts shareholders of premium shares from a limited set of the many rules that already restrict voting rights. The first five-year exemption on beneficial weighted voting rights limits premium shareholders in the following ways:

  • Directors who are premium shareholders may retain a maximum weighted voting ratio of 20-to-1;
  • These weighted voted rights only offer control benefits in two circumstances:
  1. A vote on the removal of the shareholder as a director; and
  2. In the event of a change of control, in relation to a vote on any matter.
  • Only directors of the company (or beneficiaries of such a director’s estate) may retain beneficial weighted voting rights.
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