* Resistance to ditching 'one share, one vote'
* IA says UK should look at SPACs listings
(Adds Investment Association response)
By Huw Jones
LONDON, Jan 6 (Reuters) - British corporate lobby group the
Institute of Directors on Wednesday said relaxing rules to
attract more stock market listings to London could put at risk
the UK's strong track record on corporate governance.
A review of the UK's rules on company stock market listings
was announced in November by finance minister Rishi Sunak with
the aim of boosting the number of new companies that choose to
float in London, which faces tough competition from New York.
Post Brexit, stock exchanges in continental Europe could
also become bigger rivals to London in terms of attracting new
listings business.
The Institute of Directors, in one of the first public
responses to the listing review, said it favoured leaving the
main "premium" listing rules unchanged. But it suggested
creating a separate category for a "new breed" of innovative
start-up firms that could have different rules, such as allowing
dual class shares, which give some shareholders more voting
power than others.
"The government must proceed with caution," said Roger
Barker, director of policy and corporate governance at the IoD.
"A race to the bottom to win extra listings would ultimately
be self-defeating. Good governance is one of the UK’s key
selling points."
The London Stock Exchange has said in its submission
to the listing review that it supports easing a rule that
requires companies listing on the LSE to have a minimum float of
25%, a person familiar with the LSE position said.
The LSE also supports dual class shares, the person said.
Dual class shares are common in the United States.
Relaxing the minimum free float rule and allowing dual class
shares would potentially make London more attractive to start-up
companies where founders or major shareholders often want to
maintain some control after the company floats. But dual class
shares can create conflicts of interest with minority
shareholders.
The Investment Association, whose members manage 8.5
trillion pounds in assets, said the minimum free float
requirement was "working appropriately," but could be cut to 20%
for a three-year period in some circumstances.
The principle of "one share, one vote" should be retained on
the LSE's "premium" segment, the IA said. The so-called premium
segment rules apply to blue-chip companies.
The IA also said Britain should look into helping to attract
listings by Special Purpose Acquisition Companies or SPACs,
which have boomed in the United States as a lower cost way for
start-up companies to go public.
There have been a few listings by SPACs in Britain, where
listing rules for this type of deal are tougher than in the
United States.
SPACs are shell companies that use proceeds from going
public to buy another company, not yet identified at the time of
listing. They have reshaped U.S. capital markets and continental
Europe is set to catch up this year.
Former European Commissioner Jonathan Hill, who is
conducting the review, is expected to make recommendations this
year.
(Reporting by Huw Jones. Editing by Jane Merriman)