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| Rules 'should not be watered down' for Aramco listing | Rules 'should not be watered down' for Aramco listing |
| (35 minutes later) | |
| Regulators should not "water down" the rules to allow the world's largest oil company to list in London, the Institute of Directors (IoD) has said. | Regulators should not "water down" the rules to allow the world's largest oil company to list in London, the Institute of Directors (IoD) has said. |
| It follows reports Saudi Aramco plans to list 5% of its shares in London or on another Western stock exchange. | It follows reports Saudi Aramco plans to list 5% of its shares in London or on another Western stock exchange. |
| UK rules state more than 25% of shares should be listed to stop a single shareholder having too much dominance. | UK rules state more than 25% of shares should be listed to stop a single shareholder having too much dominance. |
| But proposals by the Financial Conduct Authority (FCA) put forward in January could allow for exceptions. | But proposals by the Financial Conduct Authority (FCA) put forward in January could allow for exceptions. |
| The regulator proposed waiving a number of requirements for sovereign-owned companies. | |
| These include the need to provide independent shareholders with their own separate vote on the appointment of independent directors, which can potentially delay the process by up to 90 days. | |
| 'Protections in place' | 'Protections in place' |
| Steve Martin, director general of the IOD, questioned whether the FCA's plans were being made for "short term gain". | Steve Martin, director general of the IOD, questioned whether the FCA's plans were being made for "short term gain". |
| According to reports, Saudi Aramco could be valued at $2tn (£1.5tn) when it lists - a huge price tag that would also generate hundreds of millions of dollars in fees for investment bankers, lawyers and other professional firms involved in stock market flotations. | According to reports, Saudi Aramco could be valued at $2tn (£1.5tn) when it lists - a huge price tag that would also generate hundreds of millions of dollars in fees for investment bankers, lawyers and other professional firms involved in stock market flotations. |
| Mr Martin told Radio 4's Today programme: "The UK has the highest standard of corporate governance and shareholders know that when they invest in a company, certain protections will be in place, especially to protect minority shareholders. | Mr Martin told Radio 4's Today programme: "The UK has the highest standard of corporate governance and shareholders know that when they invest in a company, certain protections will be in place, especially to protect minority shareholders. |
| "We would not want to see those rules removed without good reason." | "We would not want to see those rules removed without good reason." |
| He added: "It's in the interest of companies like Saudi Aramco to adhere to our requirements because it demonstrates their commitment to good corporate governance." | He added: "It's in the interest of companies like Saudi Aramco to adhere to our requirements because it demonstrates their commitment to good corporate governance." |
| 'Highly inappropriate' | 'Highly inappropriate' |
| In January, the FCA said it wanted to create a new category of share listing, aimed at state-controlled companies such as Aramco. | In January, the FCA said it wanted to create a new category of share listing, aimed at state-controlled companies such as Aramco. |
| It said these firms "tend to be different from private sector individuals or entities in both their motivations and their nature". | It said these firms "tend to be different from private sector individuals or entities in both their motivations and their nature". |
| In June, pension fund Royal London Asset Management also criticised the proposals, saying an Aramco listing should not go ahead if it weakened protections. | In June, pension fund Royal London Asset Management also criticised the proposals, saying an Aramco listing should not go ahead if it weakened protections. |
| 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." | 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." |