Polymetal Demands Tighter London Listing Rules

on Oct 23, 2012

**Financial Services Authority to Water Down Listing Rules**

The Financial Services Authority (FSA), also acting as the UK Listing Authority, recently proposed to allow companies with a free float (the proportion of shares that are freely traded) of less than 25 per cent to list on the UK’s main market if there is sufficient liquidity in their shares. The suggestion is part of a consultation between the regulator, the Financial Reporting Council, fund managers, trade bodies and banks, and is expected to lead to the publication of new rules in the spring. But worries are growing over the possibility of the minimum free float restrictions allowing private shareholders to hold a controlling stake at the expense of minority investors’ interests.

**Polymetal Stands Against Looser Requirements**
Russian gold producer Polymetal (LON:POLY) has called for the introduction of tighter instead of looser London listing rules for companies which want to float on the City’s stock exchange, The Times reported on 23 October 2012. Polymetal’s chief executive Vitaly Nesis believes that the proposal to water down and potentially even eliminate London’s free-float requirements is a step in the wrong direction.

!m[Russian Gold Miner Stands against UK Listing Authority Proposal to Dilute Free-Float Rules](/uploads/story/622/thumbs/pic1_inline.png)The FTSE-listed company’s CEO said: “I strongly support tightening the rules for free floats.” According to him, regulators should phase in a rule requiring that at least 50 per cent of a company’s shares be made available for purchase, to stop private shareholders from wielding a controlling stake at the expense of minority investors’ interests. “Their interests are not aligned with shareholders. The management runs amok and does stupid things.” Nesis told The Times.

**Existing Rules Hurting Gold Miner’s Reputation**
Nesis also claimed that the existing rules, which require that 25 per cent of a company is available for public purchase, rather than being held in private hands, had hurt Polymetal’s image because it had become associated with other companies that have a poor reputation in terms of corporate governance, despite its free float being above 50 per cent. He said: “That laxity indirectly harms us. A lot of the investor crowd lumps us together with other companies … That creates an unpleasant halo around us.”

Polymetal’s CEO added that investors should be investing more in Russia, particularly in resources, but that they were still bad at estimating the risks. “It’s not political risk. It’s corporate governance risk,” he said.
**Polymetal to Increase Production as Central Banks Stock Up on Gold**
Currently, several large central banks are buying gold as a hedge against weak currencies. Countries whose central banks are stocking up on gold include Turkey, South Korea, Kazakhstan, China and the Philippines. Russia’s central bank is also increasing its gold reserves by purchasing six out of every seven ounces of the yellow metal produced in the country, which is one of the world’s top producers. According to Nessis, the Russian central bank will continue to invest in bullion. With gold demand expected to rise, Polymetal is currently looking to purchase more assets in Kazakhstan and Russia to expand its operations and increase production.


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