LONDON, Jan 30 (Reuters) - Britain’s financial regulator has proposed new rules for firms acting as so-called sponsors to London listed companies, setting out a series of minimum requirements aimed at protecting investors following scandals involving two mining companies.
Sponsors, typically investment banks or corporate finance specialists, provide guidance to companies listed on the London Stock Exchange’s premium segment as well as those looking to join the market. They also carry out checks to ensure companies are complying with listing rules.
Their role has been in the spotlight following investigations into alleged irregularities at Kazakhstan-focused ENRC, which listed in London in 2007, and Indonesian-orientated Bumi, which listed in 2011.
Both were hit by corruption probes and shareholder battles which raised questions about how they came to market.
The Financial Conduct Authority (FCA) said its proposed new rules, which it will consult with the market on between now and the end of April, include setting minimum requirements for the skills, knowledge and expertise of staff at sponsor firms.
It will also ask that sponsors have relevant experience within the last three years, instead of a previous requirement that sponsors simply had a range of recent experience and expertise in providing advice.
“The sponsor regime is crucial to ensuring an appropriate level of consumer protection and market integrity in the premium listings,” David Lawton, the FCA’s director of markets said in a statement.
“Our proposals should clarify our expectations of sponsors and the standards that we will hold them to.”
The changes sit alongside measures announced by the FCA in November aimed at bolstering its stock market listing rules to better protect minority shareholders.
The FCA said it was also looking at how well the process of joint sponsors, where a firm can appoint more than sponsor on a transaction, works in practice.