Britain looks at post-Brexit boost to company listings

Britain takes first step to regulate company ESG raters
Britain takes first step to regulate company ESG raters Copyright Thomson Reuters 2022
By Reuters
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By Huw Jones

LONDON -Britain's twin-track company listing regime could be simplified into a single entry point to the London Stock Exchange to attract more startups, the Financial Conduct Authority (FCA) said on Thursday in a move that could split market participants.

Britain wants to bolster London's attractiveness as a global location for listings as it continues to trail New York in bringing tech companies to the market, and faces added competition from Amsterdam since Brexit.

The FCA said in a discussion on Thursday that one suggestion was companies wishing to issue shares in London would no longer have to choose between two different options, standard and premium, with their different branding and standards.

"Instead, all listed companies would need to meet one set of criteria and could then choose to opt into a further set of obligations," the FCA said in a statement.

"Companies and their shareholders would decide for themselves whether these additional obligations were right for them."

The requirement for historic data on a company could also be eased, a step that Delphine Currie, partner at law firm Reed Smith said would benefit acquisitive companies and early-stage firms like biotechs.

The FCA said the threshold for requiring shareholder approval for significant transactions could also be raised, which CMS law firm said would make UK companies more internationally competitive.

The number of listed companies in Britain has fallen by 40% from a recent peak in 2008, with London now accounting for only about 5% of global company flotations.

The FCA said investor groups tended to prefer existing two-tiered listings, but others had noted that New York's Nasdaq has three segments and was still globally successful.

Advisory firms raised strong concerns about investor protection within a single segment, the FCA said.

The FCA is following up on a review that called for a reboot of the standard listing to make more companies eligible for inclusion in an index.

The Investment Association, which represents asset managers, said it was appropriate to re-examine listing rules and it would consult with its members on the proposals.

The discussion paper takes a broader look at Britain's listings regime following changes to current rules.

In July 2021, the FCA eased rules for so-called special purpose acquisition companies (SPACs) to attract more listings to London following a surge in activity in New York and Amsterdam of these "blank check" companies.

In December, the watchdog said it would allow a targeted form of dual class share structures, a feature of the New York market which has attracted many tech company listings.

The paper is open to public consultation until July 28 before any formal proposals are made.

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