Saudi’s state-owned Aramco is preparing to list only around 5% of its shares and the FCA plans would allow the group to side-step rules that companies must sell at least 25% of their shares to gain a “premium” status.
Xavier Rolet said the City must “keep up with the times” after the Financial Conduct Authority (FCA) revealed last month that it may overhaul stock market rules that would allow Saudi Aramco to pick London for its record-breaking 2 trillion USA dollar (£1.5 trillion) flotation.
Stock exchanges all over the world have been competing to attract Saudi Aramco – predicted to be valued at around £1.5 trillion – which is now deciding which financial centre to sell 5% of its shares in. If that’s true (a big if, according to most outside observers), it would make Saudi Aramco the most valuable publicly traded company on the planet.
Ashley Hamilton Claxton, corporate governance manager at Royal London, said at the time: “It would be highly inappropriate for us to be bending listing rules and bending benchmark rules to accommodate this one large company”. The company plans to offer its shares on Tadawul, the Saudi stock exchange.
The FCA’s proposal would change this, by creating a new category with fewer regulations about how a company behaves, including how controlling shareholders interact with each other and whether investors vote on independent directors.
“Good corporate governance serves to enhance business performance, protect investors and maintain the reputation of United Kingdom plc and we do not believe the proposals in the consultation paper seek to strengthen these objectives”. It also highlighted the risks associated with sovereign-controlled companies, including government interference. But Chancellor Philip Hammond this week dismissed the suggestion, in an interview with French newspaper Le Monde.
The FCA announced this month it was fast-tracking a consultation on the listing rules, ahead of Aramco’s decision where to list.