The National Association of Pension Funds (NAPF) commented on the proposed changes to the UK’s Listing Rules published by the Financial Services Authority (FSA) today.
David Paterson, NAPF's Head of Corporate Governance, said:
“Plans to bolster the corporate governance aspect of the listing rules are important and welcome, but long-term investors are disappointed by the FSA’s thinking on the free float limit.
“We note that ‘almost all buy side respondents’ argued that the ‘Listing Rules should include a requirement for a free float of 50%, or even more.’ We would be especially concerned by any instance in which the free float was pushed below 25% in ‘exceptional circumstances’, as is suggested.
“Liquidity considerations alone should not determine the free float threshold. As set out in the Kay report, there is increasing attention being given to the role of shareholders in improving long term corporate performance. A greater free float would be helpful in this respect.
“If the FSA wishes to increase the attractiveness of our regime to younger growing companies seeking to raise equity capital from the market, then they should consider changes to the Alternative Investment Market rules to make it more attractive to issuing companies and investors. AIM is the natural home for growing companies to raise the capital they need for expansion.”