FTSE International’s decision to increase the minimum free float threshold for UK incorporated companies to 25% of a company’s equity has been hailed as a “step in the right direction but does not go far enough, according to The National Association of Pension Funds (NAPF).
The global index provider this week announced results of the market consultation on minimum free float requirement for its FTSE UK Index Series. The consultation revealed a clear preference from respondents for setting a minimum 25% free float requirement.
Consequently, the FTSE Policy Group have approved a change to the ground rules of the FTSE UK Index Series, which increases the minimum free float for a company to be eligible for inclusion to 25%.??
NAPF head of corporate governance David Paterson said: “This is a step in the right direction, but it doesn’t go far enough. In reality the 25% minimum does not provide the protection for minority investors which is derived from being able to block a majority shareholder resolution.?FTSE should set up a clear timetable for reviewing the 25% minimum as we believe that shareowners would be better served by a move towards 50%.”??
Earlier this week, the NAPF wrote a letter to FTSE to express its concerns on free float rules, asserting that moving to a 50% threshold would align the UK with requirements for overseas incorporated companies, thereby eliminating the possibility of overseas companies avoiding the need to have a 50% free float by incorporating in the UK or by using a UK shell holding company.
On 12 December, the London Stock Exchange Group (LSEG) announced it had secured full ownership of index provider FTSE International. The exchange purchased from London-based media company Pearson the 50% of shares it did not already own for total cash consideration of £450 million. As 100% owner, LSEG intends to invest to accelerate growth in FTSE’s tradable index business, expanding the product range and offering the firm’s FTSE’s products to LSE’s international customer base.
Reporting by: PLANSPONSOREurope, an Asset International publication