The amended rules require a premium-listed company and its controlling shareholder(s) to be party to a relationship agreement containing independence provisions (for more information, see Briefing "Relationship agreements: a new look").

In addition to any sanctions that may be available to the FCA for a breach of the Listing Rules, a breach of the relationship agreement by the controlling shareholder, or the inclusion of the required qualified statements in an annual report, will lead to enhanced oversight measures applying to the premium-listed company. These disapply substantially all of the exemptions from the full application of the related party rules.

The voting power of independent shareholders (that is, those other than the controlling shareholder(s)) when electing and re-electing independent directors has been enhanced. These directors must now be approved by a majority of shareholders as a whole, and also by a majority of independent shareholders.

The FCA has attempted to balance this greater power for independent shareholders against accusations that it leads to minority control by providing that, where independent shareholders fail to elect or re-elect an independent director, the controlling shareholder has the option (if it can carry an ordinary resolution) to force through the election by putting it to the vote at a general meeting (held between 90 and 120 days later) at which there is no separate independent shareholder vote.

The constitution of the premium-listed company must allow this voting process to take place, although most should not need to amend their articles to provide for it.

In order to improve the protection for minority shareholders where a premium-listed company with a controlling shareholder seeks to cancel its premium listing or transfer to the standard segment, the company will need to satisfy additional conditions before doing so. As well as the approval of 75% of shareholders voting on a resolution to approve a cancellation of listing or transfer, the approval of a simple majority of independent shareholders is required.

New rules will also apply to the cancellation of a listing following a takeover offer by the controlling shareholder. Where the controlling shareholder holds 50% or less of the voting rights in the premium-listed company before the takeover offer, there will be no need to hold any vote (whether of the independent shareholders or otherwise) where the controlling shareholder achieves 75% voting control through the takeover. Where the controlling shareholder holds more than 50% of the voting rights, it must either receive acceptances from a majority of independent shareholders, or achieve over 80% ownership (whichever is the lower threshold) in order to avoid a vote.

The existing requirement for a new applicant to demonstrate that it will be carrying on an independent business as its main activity is now supplemented by six factors that may indicate to the FCA that it is not able to satisfy this requirement. Four of the six factors refer to circumstances where the relationship with a controlling shareholder may detract from the independence of the applicant.

While none of these factors will, of itself, determine eligibility, certain new applicants may find themselves subject to scrutiny in relation to one or more of them. The independent business requirement is also a continuing obligation, so existing premium-listed companies will need to have regard to these factors as well.

Information that must be included in the annual report under LR 9.8.4R should now be set out in a single table, or be indexed in a table of cross-references indicating where in the annual report it is set out. This is intended to help shareholders to find the relevant information.

For the first time, standard-listed companies will be subject to certain general listing principles that require them to take reasonable steps to establish and maintain adequate systems and controls to comply with their obligations, and to deal with the FCA in an open and co-operative manner. Premium-listed companies will not be able to have classes of equity shares with voting rights disproportionate to their economic interests.

Although the existing minimum 25% free float requirement has not been amended, the FCA has reformulated its approach to giving waivers. One factor that it may take into account is whether the free float is expected to have a market value greater than £100 million. The FCA has explicitly reserved the right to revoke a dispensation from the 25% requirement where the market is not operating properly. Shares locked up for longer than 180 days are now excluded from counting as shares in public hands, as they do not contribute to liquidity.

The procedure for disclosing a smaller related party transaction has been amended. There is no longer a requirement to contact the FCA before entering into such a transaction, but the listed company must announce it through a regulatory information service rather than making later disclosures in the annual report. The company must still obtain confirmation from a sponsor that the terms of the transaction are fair and reasonable as far as its shareholders are concerned.

Voting on key shareholder resolutions that are required of premium-listed companies is restricted to the holders of premium-listed shares. This restriction extends to certain independent shareholder resolutions, including on the election or re-election of independent directors of controlled companies. This change is likely to affect only a limited number of premium-listed companies. In light of the constitutional changes that it may require, a longer transitional period has been introduced (see box "Transitional provisions").

The amended rules are available at http://media.fshandbook.info/latestNews/FCA_2014_33.pdf.