The number of listed companies in the UK has dropped 40% since 2008 despite efforts by the government and regulators to attract businesses.
Via Sarah Taaffe-Maguire, Business Correspondent @taaffem
Tuesday, May 2, 2023 22:35, UK
Britain’s financial watchdog will announce plans to change regulations on making companies publicly owned after a series of prominent businesses were snubbed by the London Stock Exchange.
The Financial Conduct Authority (FCA) on Wednesday will announce proposed changes to its rules about companies listing on the London Stock Exchange.
It hopes to make regulation more efficient, easier to understand and more competitive after the number of UK-listed companies has fallen by 40% since 2008, according to The UK Listing Review, conducted by Lord Hill.
The regulator said the current rules were “regarded by some” as “too complicated and cumbersome”. Politicians and regulators hope that increasing listings in the UK will help with economic growth.
Although three prime ministers have lobbied for it to be listed in London, major IC designer based in Cambridge Arm has decided to go public with an initial public offering (IPO) on the New York Stock Exchange. Its owners see floating in New York as the best way to recoup their $32bn (£26.7bn) investment in the company.
Some in Arm’s parent company Softbank and the government have criticized the FCA and blamed the “tough” rules that led to the decision to agree with New York.
The world’s largest supplier of building materials, CRH, also announced in March that moved its main listing to New York.
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Concerns about companies leaving London for New York were reinforced when Paddy Power and Betfair owner Flutter announced that they would pursue a secondary list across the Atlantic Ocean.
The FCA’s proposed rules are designed to help founders maintain control in their companies by allowing them to hold more voting shares.
Changes to the advisory, if enacted, would eliminate the two listing types and create a single category. There are currently standard and premium listing segments.
The FCA said the move would “remove eligibility requirements that might discourage early-stage companies, be more permissive to a two-class share structure, and eliminate the mandatory vote of shareholders.” for transactions such as buybacks”.
The watchdog said removing some of the required votes would “reduce friction for companies pursuing their business strategies”.
However, there have been concerns about the impact of the changes on investor rights,
“We strongly support the principles behind listing rule reform to make the UK more competitive, but eroding shareholder rights risks undermining market standards and this not the right answer,” said the managing director of a UK investment platform.
Richard Wilson of Interactive Investor said: “The two-tier structure, which comes with distinct voting rights, erodes shareholder rights.
“Distorted rights distort governance and accountability. When company founders seek outside funding from shareholders, as share holders, they must respect their rights. One share, one vote is the cornerstone of shareholder democracy, and we are concerned that the specter of the dual class shares, which we have actively campaigned against, remains very much. big.”
Stakeholders will have eight weeks to review proposals and provide feedback. After receiving feedback from interested parties, the FCA will create a policy statement and publish it in late 2023 or early 2024.
Work on reforming the rules has been underway since Brexit and Lord Hill started The UK Listing Review in 2020.
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Responding to the advisory article, Lord Hill said “I very much welcome these proposals from the FCA, which build on the direction of the move we have attempted to come up with during the review of the list. mine.
“If implemented, London will be able to take on our international rivals.”
But factors beyond the listing rules will affect where companies list, the FCA executive said.
“While regulations play an important role, a company’s decision on whether or not to list, and where, is influenced by many factors, so substantive change will also requires a concerted effort from government and industry.”
“Our proposed reforms will significantly rebalance the regulatory burden to the benefit of listed companies and investors, who are willing to set their own risk appetite and risk appetite,” said Nikhil Rathi. terms of their own commitments”.