FSA prepares to crack down on listing rules

L0NDON’S ambitions to attract foreign-owned mining companies have been dealt a blow by allegations of irregularities at subsidiaries of coal group Bumi, just days before a clampdown on listing rules.

The Financial Services Authority (FSA) will publish plans on Tuesday designed to protect investors and ease concerns that London-listed companies such as Bumi, an Indonesian coal venture co-founded by financier Nat Rothschild, are diluting standards of corporate governance.

Governance consultancy firm Pirc noted concerns shared by regulators and investors about groups with dominant shareholders in which relatively few shares are traded on the market.

Pirc said: “Minority shareholders can struggle to have their voices heard, and unusual governance practices are difficult to challenge.”

The FSA proposals are expected to tighten rules on reverse takeovers, as well as addressing the power of controlling shareholders and the independence of company boards. They are also likely to prevent cash shell companies – small listed companies into which larger private groups are typically folded in a reverse takeover – from joining London’s top indices.

Bumi has asked London law firm Macfarlanes to launch a probe into potential financial irregularities at its subsidiaries.