Investor protection

Treasury - corporate finance - law - regulation - listed companies - misconduct - UK - London Stock Exchange (LSE) - Financial Conduct Authority (FCA) - UK Listing Rules.

Investor protection is designed to protect investors - both individual and institutional investors - in financial markets from all forms of misconduct by other market participants, including the companies that they invest in.

Investor protection includes detecting and deterring financial crime, promoting market integrity and resilience, and competition in the interests of market participants including retail consumers.

It also includes prudential regulation, the detection, deterrence and prevention of market abuse, and promoting ethical behaviour.

Investor protection also provides for compensation and other redress through appropriate agencies.

In promoting investor protection, regulators must also balance the related costs and compliance burdens on regulated firms.

From time to time, following appropriate investigation and consultation, regulators may choose to reduce some elements of investor protection, where the related costs and compliance burdens are not warranted.

Investor protection and consumer protection overlap to protect retail investors, who are both consumers and investors when making individual investments.

FCA removes voting requirements for some listed company transactions

"The FCA has set out a simplified listings regime... for companies seeking to list their shares in the UK.

The overhaul of listing rules better aligns the UK’s regime with international market standards. It also ensures investors will have the information they need to make decisions about their money, while maintaining appropriate investor protections to hold the management of the companies they co-own to account.

The new rules remove the need for votes on significant or related party transactions and offer flexibility around enhanced voting rights. Shareholder approval for key events, like reverse takeovers and decisions to take the company’s shares off an exchange, is still required...

The FCA has been clear that the new rules involve allowing greater risk, but believes the changes set out will better reflect the risk appetite the economy needs to achieve growth."

FCA press release - 11 July 2024.

Listing rules complement other investor protection requirements on companies

"The disclosure requirements under the UK Listing Rules (UKLRs) will complement other requirements that already exist... which include:

• the Market Abuse Regulation (MAR), which requires ongoing disclosure of inside information and provides a basis for action against misleading statements and delayed disclosure

• annual and interim financial reporting required by our Disclosure Guidance and Transparency Rules (DTR) which will continue to underpin disclosure in markets, and

• the UK Prospectus Regulation, which sets out whether and when prospectuses are required.

We hold supervisory and enforcement powers in relation to these requirements, and have dedicated, specialist teams monitoring and ensuring adherence.

Civil and criminal penalties also apply for breach of such requirements, including under MAR and the Financial Services and Markets Act (FSMA).

Other investor protections are provided by UK company law which secures fundamental shareholder rights and enables shareholders to hold management to account, including, for UK companies, the ability of one or more shareholders holding at least 5% of the voting shares in a company to propose resolutions at general meetings.

There is no restriction on the type of resolutions that shareholders holding 5% or more can propose, which gives shareholders a significant ability to hold the companies in which they invest to account and challenge decisions made.

More widely, the Financial Reporting Council’s (FRC) UK Corporate Governance Code (UK CGC) and Stewardship Code deal with relationships between investors and companies and promote additional transparency.

The FRC’s recently updated UK CGC continues to provide a robust framework for good corporate governance practices, and to which our rules for commercial companies and closed-ended investment funds will continue to refer."

UK Listing Rules (UKLR) effective from 29 July 2024 - PS24/6: Primary Markets Effectiveness Review: Feedback to CP23/31 and final UK Listing Rules - FCA.

Why we are changing the listing rules

"The new rules aim to encourage prospective issuers to choose a UK listing by streamlining our rules and removing our ‘premium’ and ‘standard’ listing segments in favour of a new commercial companies category for equity shares.

Our changes are also designed to remove frictions to growth once companies are listed, while continuing to place an emphasis on disclosure that puts information in the hands of investors to inform their investment decisions.

These final rules follow extensive engagement, feedback, and cost-benefit analysis of our original proposals."

FCA - 11 July 2024.

See also

• Civil law
• Closed-ended
• Commercial company
• Company law
• Conduct
• Consumer Financial Protection Bureau
• Consumer protection
• Corporate finance
• Criminal law
• Disclosure
• Disclosure Guidance and Transparency Rules (DTR)
• Equity share
• Financial Conduct Authority (FCA)
• Financial markets
• Financial reporting
• Financial Reporting Council (FRC)
• Financial services
• Financial Services Act 2021
• Financial Services and Markets Act 2000 UK
• Financial Services and Markets Act 2023 UK
• Friction
• General meeting
• Initial public offering
• Inside information
• Institutionalisation
• Investment fund
• Investor relations
• Listing
• London Stock Exchange
• Main Market
• Market Abuse Regulation (MAR)
• Misconduct
• Pre-emption rights
• Premium Listing
• Prospectus
• Prudential regulation
• Regime
• Related party transaction
• Resolution
• Risk appetite
• Risk management
• Securities Investor Protection Corporation (SIPC)
• Security
• Share
• Significant transaction
• Standard Listing
• Stewardship Code
• Stock exchange
• Treasury
• UK Corporate Governance Code
• UK Listing Rules
• UK Prospectus Regulation

Other resources

• FCA overhauls listing rules to boost growth and innovation on UK stock markets - FCA press release - 11 July 2024
• UK Listing Rules (UKLR) effective from 29 July 2024 - PS24/6: Primary Markets Effectiveness Review: Feedback to CP23/31 and final UK Listing Rules - FCA

• What are the major changes to the UK's Listing Rules - cytec