Rules for companies seeking to list on the London Stock Exchange will be streamlined in a bid to stop them departing for overseas markets.
The number of UK-listed companies has fallen by about 40% since its peak in 2008, according to the UK Listing Review. Between 2015 and 2020, the UK accounted for only 5% of global Initial Public Offerings.
Under Financial Conduct Authority (FCA) reforms, the “standard” and “premium” listing segments will be replaced by a single category for equity shares in commercial companies. The watchdog said this would remove the eligibility requirements that can deter early-stage companies and “be more permissive on dual class share structures”. Such structures – dubbed US-style “golden shares” – would let founders keep control of listed companies for 10 years via special voting rights.
Other changes include removing mandatory shareholder votes on transactions such as acquisitions “to reduce frictions to companies pursuing their business strategies” and scrapping a requirement for start-ups to earn revenues for three years before listing.
“Access to a potentially wider range of companies listing will provide greater opportunities for investors in UK markets and help create jobs and growth,” said FCA chief executive Nikhil Rathi. “But we must be upfront that the changes we are proposing will mean passing greater investment risk to investors and greater responsibility to shareholders to hold the companies they own to account.”
The watchdog is consulting on the reforms and aims to introduce them by the end of the year.