Further UK Corporate Governance Reform Considered as Private Equity Acquires FTSE Companies

In August 2026, the world’s largest shareholder, Norway’s USD 2.3 trillion sovereign wealth fund, expressed concern regarding the dilution of shareholder rights globally. According to Norges Bank Investment Management (NBIM), the institution behind the running of the fund, competition between stock exchanges for new listings has led to a weakening of standards in an effort to encourage companies to IPO in their respective markets. NBIM also highlighted the importance of shareholder rights in its response to the Principles of Responsible Investment’s strategy consultation for 2026:

In the UK, recent updates were made to the Listing Rules, first the UK Listing Rules for Main Market companies on the London Stock Exchange (LSE) in July 2024, and subsequently the AIM Rules for Companies (AIM Rules) for SMEs listed on the LSE’s less stringent Alternative Investment Market (AIM) in August 2026. The general drive of these changes was to remove regulatory burdens and make it easier for UK listed companies to operate and raise capital in London.

However, alongside these changes were a number of amendments to corporate governance standards in the UK market. One of these main changes to both the UK Listing Rules and AIM Rules was to allow companies to list with dual class share structures for certain shareholders on admission to their respective markets with no sunset clause required. While it is acknowledged that this approach may encourage more founder-led companies to list on the LSE, it is nonetheless at odds with the ‘one share, one vote’ principle, which has been a bedrock of UK corporate governance for many decades. Indeed, following the changes to the UK Listing Rules in 2024, the International Corporate Governance Network stated that it was “deeply concerned […] by the introduction of a two-tier system for share ownership” in the UK.

The UK market is not the only one to have recently amended its rules to allow for dual class share structures at admission. NBIM, which holds approximately an average of 1.5% of all listed companies globally, highlighted the proliferation of unequal voting rights worldwide, and its ensuing effect on the voting power of independent shareholders, as one of its main concerns. Indeed, writing in the Financial Times, the CEO of NBIM highlighted in September 2026 that: “Some 60% of jurisdictions around the world now allow shares with unequal voting powers, up from 44% in 2020, according to OECD figures from last year.”

Similarly, changes were made in recent years to key cornerstone documents in the UK market, including the UK Corporate Governance Code and the Investment Association’s Principles of Remuneration. These amendments were widely construed as a streamlining of the documents’ principles and a reduction of prescriptive wording in order to allow listed companies greater flexibility in relation to their governance arrangements, in line with the UK market’s long-held ‘comply or explain’ principle.

In August 2026, the update to the AIM Rules went even further and removed the requirement for AIM companies to specify a recognised corporate governance code, and subsequently to ‘comply or explain’ against the code’s principles. This marks another significant departure from a keystone of UK market practice as it had developed in recent decades (for more information, see: New AIM Rules mark a departure from the UK comply or explain principle).

The ongoing debate over whether the UK’s high corporate governance standards are a boon or an impediment to UK market competitiveness was previously discussed at length in our December 2025 article (for more information, see: Are Market Challenges Eroding the UK’s Long-Standing Good Governance Practices?).

To summarise some of the arguments briefly, the Governance for Growth Investor Campaign stated in 2025 that:

On the other hand, the CEO of the LSE, Julia Hoggett, has previously argued that the stringency of the UK market’s remuneration standards for Executive Directors hinders it from remaining competitive and discourages London from attracting and retaining global talent for its companies.

Various commentators have also called on the UK Government to remove the 0.5% Stamp Duty levy on share purchases to allow the UK market to compete with others that have no such tax.

In August 2026, the recent nuances of this discussion became evident in a review by the Financial Conduct Authority (FCA), which found that the governance frameworks at some high-growth financial firms had failed to keep pace with their expansion. As Minerva Analytics highlights, the timing of the review is notable insofar as while the FCA “[…] is pressing ahead with reforms designed to make the UK a more attractive place for firms to start, scale and list, it is also reminding firms that growth can create vulnerabilities if appropriate controls are not established”. 

Private equity enters stage

Since our previous article, it has become evident that the LSE faces competition not only from other stock exchanges, but also from another direction. While in recent years some commentators lamented the subdued M&A activity in the UK market, the acquisition of a large number of FTSE 350 companies by private equity during the 2026 proxy season has led others to consider whether London will remain a global listing location if the current trend continues. As the Financial Times explains:

There are various reasons suggested for this one-way flight of listings from London, including the lack of liquidity in the UK market, the significant decline of domestic pension fund investment, and the apparent undervaluation of UK equities, which makes listed companies tempting targets for foreign and private capital.

Further corporate governance reform ahead?

While commentators remain at odds regarding the reasons for the LSE’s current difficulties, many agree that further regulatory reform is likely required.

In early September 2026, the UK Government announced the opening of a long-awaited consultation that endeavours to cut regulatory reporting, including to streamline “financial reporting, the strategic report, and remuneration reporting, while ensuring corporate governance reporting is flexible and proportionate”. According to the consultation, the Department for Business, Innovation, Science and Trade is considering the removal of the requirement for remuneration report resolutions, and clarifications to make it easier to hold virtual AGMs, among other things.

Some of these proposed changes were welcomed by the Institute of Chartered Accountants in England and Wales, whereas the Governance for Growth Investor Campaign, which is backed by various UK pension funds, expressed its disappointment regarding the amendments to virtual AGMs and questioned the proposal to remove advisory votes on remuneration reports.

However, whether the consultation will see any of these changes taken forward with the stated aim of making London a more attractive listing venue remains to be seen.