Author: Dianne Ramdeen

Until mid-2024, companies listing on the London Stock Exchange’s Main Market were required to choose between two distinct categories: a standard listing or a premium listing. A standard listing met only the minimum requirements set out in UK and EU legislation, whereas a premium listing demanded higher governance and disclosure standards, including compliance with the UK Corporate Governance Code and eligibility for FTSE index inclusion.

In July 2024, this framework was replaced with a single category: Equity Shares – Commercial Companies (ESCC). The reform was introduced by the Financial Conduct Authority (FCA) as part of its Primary Markets Effectiveness Review. Its objective was to simplify the listing process, enhance London’s competitiveness as a global financial centre and ensure the regime remains attractive to both high-growth issuers and long-term investors.

The FCA identified that the two-tier system was overly complex and, in some cases, deterred companies (particularly founder-led or rapidly expanding firms) from listing in London. The ESCC framework consolidates rules into a single category, balancing transparency and investor protection with greater issuer flexibility. To support a smooth transition, companies already listed under the former system were placed either directly into ESCC or, in the case of many standard listings, into a dedicated Transition category. This transitional measure allows issuers time to adapt and provides a pathway to migrate into ESCC.

Changes to Corporate Governance Reporting

The UK Corporate Governance Code has always operated on a “comply or explain” basis, meaning that companies either comply with its provisions or explain where and why they differ. What has changed with ESCC is who must engage with the Code. Under the former premium listing regime, reporting against the Code was mandatory and a condition of eligibility. Companies were required to demonstrate, both at admission and on an ongoing basis, that they applied the Code’s provisions. In contrast, standard listings had no obligation to report against the Code at all, which offered flexibility but limited investor confidence and institutional participation.

The ESCC framework introduced a middle ground. All companies are now expected to report against the Code but compliance is no longer a prerequisite for admission. Instead, issuers must disclose their governance practices and explain any deviations. This shift removes governance as a barrier to listing while (hopefully!) ensuring that investors retain the information they need to assess governance quality.

Other Features of ESCC

The ESCC regime also targeted financial reporting and capital-raising requirements. Issuers must continue to publish audited annual financial statements and half-yearly reports, however, several prescriptive rules from the premium listing regime have been replaced with a disclosure-based model. For example, mandatory shareholder approval for every significant or related-party transaction is no longer required. Instead, companies must disclose details of such events, allowing investors to make informed judgements without unduly slowing corporate activity.

Another important development is the acceptance of dual-class share structures. This change is designed to attract founder-led and innovative companies that may seek to retain control while accessing public capital.

Companies listed under ESCC remain eligible for FTSE index inclusion provided they satisfy index rules, preserving continuity for institutional investors.