Sponsors are firms we approve to advise premium listed companies on their obligations under the listing regime and to provide important assurances to us regarding certain transactions.
The sponsor’s role in ensuring markets function well
The FCA’s strategic objective is to ensure that relevant markets function well. We see maintaining the integrity of the Premium Listing regime as a fundamental part of that objective. The sponsor regime is a component of the super-equivalent Premium Listing regime.
The appointment of a sponsor at key points during the life of a Premium Listed company provides additional protection for investors and plays a fundamental role in increasing investors’ confidence and participation in the market by reducing the risk of harm derived from market misconduct.
What is a sponsor?
Sponsors perform a unique, dual role:
- they provide expert guidance and advice to Premium Listed companies or companies seeking a Premium Listing on our rules
- they provide us with, and we rely on, certain key confirmations
A firm wishing to become a sponsor must first be approved by us. The list of sponsors includes large investment banks, smaller corporate finance houses as well as accounting and legal firms.
How the sponsor regime meets the needs of multiple stakeholders
The sponsor regime has a number of stakeholders:
- The FCA. We rely on the confirmations given to us by sponsors, for instance in relation to a company’s ability to meet our eligibility requirements, or to comply with its ongoing obligations as a Premium Listed company.
- Investors, who will perform their own due diligence but can take additional comfort from the knowledge that the sponsor will carry out due diligence and provide important confirmations to us.
- Companies seeking or with a Premium Listing, which are required to appoint a sponsor upon IPO and in certain circumstances thereafter. Sponsors provide guidance and advice to their clients as well as liaising with the FCA on their behalf. Sponsors help maintain high standards for Premium Listing which in turn contributes to the status and reputation of the Premium List, to the benefit of listed companies.
The legal basis for the sponsor regime
The legal basis for the sponsor regime is set out in s88 of the Financial Services Markets Act 2000 (FSMA), which gives us powers to maintain a list of sponsors, to make rules for sponsors and to discipline sponsors. We also have powers to restrict, limit, suspend, cancel, publicly censure and fine sponsors.
The rules governing sponsors and their conduct of sponsor services are set out in Chapter 8 of the Listing Rules (LR 8). LR 8 also includes a limited number of rules for issuers, including a rule requiring issuers to cooperate with their sponsor.
Overall, the principles, rules and guidance that define the sponsor regime essentially describe the fiduciary relationship between the FCA and a sponsor.