The FCA has published a consultation paper on proposed changes to its UK Listing Rules for closed‑ended investment funds, focused on the management of conflicts of interest.
Closed‑ended investment funds have a distinct structure, operating as both listed companies and investment vehicles. Shareholders appoint a board, which in turn appoints and oversees the investment manager responsible for delivering returns. Shareholder rights are central to this model, enabling investors to hold boards to account and to influence key decisions.
The review, announced in March as part of the FCA's ongoing work on the UK Listing Rules, considers how its rules support strong shareholder rights and effective management of conflicts of interest in a range of potential future scenarios. As part of good regulatory practice, the FCA has been stress testing how the rules would operate in different hypothetical situations to ensure they remain robust over time and as markets evolve.
This has included exploring a range of plausible scenarios to test whether our conflicts of interest framework would operate consistently in future. As a result of this work, the FCA has identified a small number of targeted and proportionate adjustments to ensure its rules continue to apply consistently in all relevant scenarios. Specifically, they aim to:
- Ensure the same protections that apply to arrangements with an existing investment manager also apply when a new manager is being appointed, to ensure consistent protections for all changes to investment manager fees and strategies.
- Recognise the association between a director and a substantial shareholder that proposed them for a board appointment, to strengthen the integrity of boards acting independently of any investment manager.
- Recognise the conflict arising where a substantial shareholder is also an investment manager and votes on material changes to investment policies, to ensure that the rights of minority shareholders are appropriately protected.
The FCA believes these changes are important given the central role of the investment management contract in shaping outcomes for shareholders.
Jon Relleen, director of infrastructure & exchanges – supervision, policy & competition division at the FCA, said:
'Strong shareholder rights and minimal conflicts of interest are crucial to well-functioning markets, including for investment trusts. These proposals are targeted, forward-looking changes to how conflicts of interest are managed, reflecting the central role of the investment management relationship for these companies. We intend to be very careful to not interfere with voting or shareholder engagement, and we want views on whether these changes strike the right balance.'
The FCA welcomes views on whether these proposals strike the right balance by 14 August 2026 and aims to finalise rules before the end of the year.
Alongside this consultation, the FCA is also publishing examples of good practice to support retail investors in exercising their voting rights, as part of its broader work to promote effective shareholder engagement.
Notes to editors
- Read the consultation paper.
- Read the good practice guidance.