City regulator met Saudi Aramco before unveiling new IPO rules

Cornelia Mascio
Ottobre 13, 2017

Andrew Bailey, chief executive of the Financial Conduct Authority (FCA), held the talks before publishing heavily criticised rule changes that could attract a multi-trillion pound listing from the oil giant.

The FCA in July launched a consultation over its plans to create a new category within its "premium" listing to cater for companies controlled by a shareholder that is a sovereign country, exempting companies controlled by governments from certain related party and controlling shareholder rules. It has faced criticism that the weakening of the rules will damage London's reputation for protecting shareholders in companies with dominant owners.

But Bailey insisted the new category would not weaken protection for investors and that those who did invest in companies in the new group would know what they were buying.

Nicky Morgan, chairwoman of the influential Treasury Select Committee, had written to the FCA demanding an explanation.

In April, Prime Minister Theresa May was joined by London Stock Exchange chief executive Xavier Rolet on a trip to Saudi Arabia as the pair looked to trumpet London's attractions amid competition from New York, Hong Kong and Tokyo for what is likely to be the world's largest ever IPO.

However, given the public discussion of these events, we can confirm that we held conversations with Saudi Aramco and their advisors in light of their interest in a possible United Kingdom listing in the early part of this year. "We emphasised during those conversations that we were reviewing the listing regime", Bailey said.

Having received his response, Morgan said: "Questions remain about the level of political involvement in the consultation".

Chair of the Business, Energy and Industrial Strategy committee Rachel Reeves says what is good for City traders is not necessarily good for the country's economy or investors. Ashley Hamilton Claxton, corporate governance manager at Royal London Asset Management, said: "While we fully support the case that the United Kingdom must stay competitive in a growing global marketplace, we do not think rewriting the rules is the correct way to go about it".

Bailey also said in the letter that the proposals wouldn't be detrimental to investors.

The FCA is reaching the end of its consultation on the proposals and aims to reveal its conclusions by the end of the year. "The recommendations include the point that London retaining its position as the leading worldwide financial centre supports the aim of sustainable economic growth", said Bailey.

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