LONDON, Sept 8 (Reuters) - Britain's financial regulator has been told by two parliamentary committees to address concerns that plans to relax rules on listing state companies could undermine corporate governance.
The Financial Conduct Authority (FCA) in July proposed a new listing category for companies controlled by sovereign states, which was seen as a move to help London win the listing of Saudi Aramco as the oil giant prepares for what is expected to be the world's largest ever initial public offering.
The proposal, however, has atttracted the attention of Britain's Treasury Select Committee and Energy and Industrial Strategy Committee, chaired by Nicky Morgan and Rachel Reeves respectively, who have written an open letter to FCA boss Andrew Bailey asking if the rules could weaken "protection for private investors against interference from foreign sovereign company owners."
They asked the regulator to explain if Aramco's interest in listing in London influenced the consultation and whether companies controlled by sovereign entities engaged in it.
Morgan and Reeves also asked if ministers and government officials had been consulted on the balance between attracting foreign investment and maintaining the integrity of Britain's stock market.
The FCA said it has received the letter and will respond in due course.
The FCA's proposals were applauded by Britain's financial lobby groups as helping to ensure the country's capital markets remain attractive once it leaves the European Union.
But they have received a cold reception from investors and corporate governance groups that say the proposed new listing category could lower the quality of companies on the London stock market and leave shareholders with less protection when things go wrong.
Aramco has yet to decide where it will list, though London and New York have been touted as frontrunners for the bulk of the public flotation. (Reporting by Clara Denina; Additional reporting by Huw Jones; Editing by David Goodman)