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FCA held Saudi Aramco meetings before proposing listings change

The UK’s financial watchdog has for the first time admitted that it met with executives working for Saudi Aramco before it proposed changing its listing rules, which some critics have claimed is an attempt to entice the giant oil company to float its shares in London.
The Financial Conduct Authority suggested creating a new category within its “premium” listing in July, which means that some state-controlled companies are exempt from certain rules. Andrew Bailey, the head of the FCA, has now told MPs that the watchdog discussed these changes with Saudi Aramco - the state-owned oil company of Saudi Arabia - some months before.
In a letter written in response to questions asked by members of two parliamentary select committees and published on Friday, Mr Bailey said that the watchdog “held conversations with Saudi Aramco and their advisors in light of their interest in a possible UK listing in the early part of this year”. He added: “We emphasised during those conversations that we were reviewing the listing regime.”
Investors have voiced concern that the FCA’s decision to create a new category for firms whose controlling stakeholder is a sovereign country could tarnish London’s reputation for corporate governance.
FCA held Saudi Aramco meetings before proposing listings change

London is vying with New York, Hong Kong and other financial centres to be the venue of Saudi Aramco’s initial public offering
London is vying with New York, Hong Kong and other financial centres to be the venue of Saudi Aramco’s initial public offering (IPO), which is likely to be the world’s largest ever and generate millions in fees for its advisers.
The FCA came out with its proposed new rules soon after Theresa May, the prime minister, and Xavier Rolet, the chief executive of the London Stock Exchange, travelled to Saudi Arabia in a bid to drum up business and met Aramco’s chief executive Khalid al-Falih in Riyadh.
The two parliamentary select committees had written to Mr Bailey to try to gauge the level of political pressure on the decision to change the listing rules. The head of the watchdog has previously said that the FCA had held no meetings with ministers to discuss the changes.
However Nicky Morgan MP, the chair of the Treasury Select Committee, said: “Questions remain about the level of political involvement in the consultation. The UK’s world-class reputation for upholding strong corporate governance mustn’t be watered down.”
The changes to the UK’s listing rules relate to the relations between a company and its controlling shareholder, and whether investors get to vote on independent directors.
Who rules Saudi Arabia?
At the time, Chris Cummings, the head of the Investment Association, which represents the UK’s largest asset managers, said: “Investors believe a premium listed segment without these investor protections is not a premium segment and will not provide the protections that investors expect.”
MPs also queried plans to allow Saudi Aramco to float less than the standard amount of 25pc of its stock. But Mr Bailey said that current listing rules allow companies to float a smaller percentage providing there is sufficient liquidity - or volume of shares - in the market. 
The consultation on the proposed new rules closes today.
Mr Bailey is due to appear before the Treasury Select Committee later this month.
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