MPs turn up heat on Aramco rule change
THE UK’s financial watchdog has defended a potential change to listing rules paving the way for a £1.5trillion float of Saudi Aramco as it admitted holding talks with the oil giant.
Financial Conduct Authority chief executive Andrew Bailey insisted protections for investors would not be weakened, amid concerns that efforts to keep Britain open for business could dilute corporate governance standards.
The FCA’s proposals would make it easier for state-owned companies to list in London. Current rules require that at least a quarter of shares are sold to attain a premium listing. The Saudi government plans to sell about 5 per cent of Aramco, with London vying with New York as its preferred destination.
Responding to a letter from Treasury select committee chair Nicky Morgan, and business committee chair Rachel Reeves, Bailey told MPs: “If the new category is clearly delineated within premium listing, investors would be aware that companies had chosen it because of their particular relationship with their sovereign shareholder.
“They could then choose whether or not to invest, in the knowledge of that relationship, and with the benefit of greater protection than if the company had a standard listing.” Bailey said the FCA routinely meets with potential listing candidates, which are not disclosed given the commercial sensitivities. But he added: “Given the public discussion of these events, we can confirm we held conversations with Saudi Aramco and their advisers, during which we emphasised that we were reviewing the listing regime.”
Morgan said questions remain about the level of political involvement in the consultation and warned that “the UK’s world-class reputation for upholding strong corporate governance mustn’t be watered down”.