The Financial Conduct Authority (FCA) has opened a consultation on changes to the UK Listing Rules for closed ended investment funds, centred on conflicts of interest.
These funds have a dual role as quoted companies and investment vehicles.
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Investors elect the board, and the board then selects and supervises the investment manager tasked with generating returns.
In this set-up, shareholder rights are a core feature because they allow investors to challenge boards and shape major decisions.
The review was flagged in March as part of the regulator’s wider work on the UK Listing Rules.
It examines whether the framework “support strong shareholder rights and effective management of conflicts of interest in a range of potential future scenarios”.
The FCA had been testing how the rules might function in a variety of hypothetical cases.
After that exercise, the regulator said it had found a “small number of targeted and proportionate adjustments” needed so the rules work consistently across relevant situations.
One proposal would extend to newly appointed investment managers the same safeguards that already apply to arrangements involving an existing manager, covering changes to fees and investment strategy.
Another would take account of links between a director and a substantial shareholder who backed that director’s board appointment, with the aim of reinforcing board independence from investment managers.
A further change would address cases where a substantial shareholder is also an investment manager and takes part in votes on major amendments to investment policies, to protect minority investors.
The FCA is inviting responses on the package until 14 August 2026 and plans to complete the rule-making process before year-end.
