Posted on Mar 03, 2021
Britain is to modernise its listing rules to attract more high-growth and “blank cheque” SPAC company flotations to London, Finance Minister Rishi Sunak said after a government-backed review said the capital was on the back foot after Brexit, Reuters reports.
The London Stock Exchange is facing tougher competition from New York and Amsterdam since Britain fully left the EU on December 31st.
Sunak commissioned a review of listings rules last November. Led by former European Commissioner Jonathan Hill it published its recommendations on Wednesday.
“The review has more than delivered and I’m keen we move quickly to consult on its recommendations, cementing the UK’s reputation at the front of global financial services,” Sunak said in a statement.
The Financial Conduct Authority will consult publicly on the proposed changes, though some would require legislation to implement.
The composition of the FTSE index makes clear another challenge: the most significant companies listed in London are either financial or more representative of the ‘old economy’ than the companies of the future. The recommendations in this report are not about opening a gap between us and other global centres by proposing radical new departures to try to seize a competitive advantage. They are about closing a gap which has already opened up. All the recommendations are consistent with existing practices in other well-regulated financial centres in the USA, Asia and Europe.
The changes seek to move London in line with New York and other financial centres by allowing founders to list their company while still retaining significant control.
Hill recommends allowing dual class share structures to give directors and founders enhanced voting rights on certain decisions for five years, a move retail investor groups say is contrary to the “one share, one vote” principle. The minimum “free float” or amount of a company’s shares or in public hands would be cut from 25% to 15%.
Hill also recommends liberalising listing rules for special purpose acquisition companies or SPACs, whose flotations in New York have surged over the past year, with Amsterdam also attracting some recently.
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