(Adds shareholder association comments)
By Huw Jones
LONDON, Nov 19 (Reuters) - Britain's finance ministry said
on Thursday a former financial services commissioner for the
European Union will review listing rules to make London more
attractive for tech companies, triggering shareholder warnings
of a financial "wild west".
Jonathan Hill will look at free floats and dual class share
structures, the finance ministry said, as Britain reviews its
rules to ensure London can compete with New York and Asia as it
loses unfettered access to the EU, its biggest customer.
Firms listed on the London Stock Exchange must currently
have a minimum 25% of their shares available for trading, but
some tech entrepreneurs are keen to maintain control of their
companies and deter hostile takeovers by having a lower free
float.
Dual class share structures, common in the United States but
restricted for top listed UK companies, allow some shares more
voting rights than others.
Shareholder groups oppose dual class shares, saying that
"one share, one vote" ensures better standards of corporate
governance and protects minority shareholders.
"More dynamic equity markets will enhance the UK’s position
as a world-leading financial centre, and drive growth and
innovation across the wider economy," Britain's finance minister
Rishi Sunak said in a statement.
UK Shareholders, which represents retail investors, said
dual class shares could open the door to riskier investments
that shareholders may not understand.
"We don't want listing standards which encourage a slide to
the financial wild west," said Dean Buckner, policy director at
UK Shareholders.
The Investment Association, which represents asset managers,
said more could be done to encourage small companies to list.
There are 1,100 companies listed on the London Stock
Exchange, with a market capitalisation of 3 trillion pounds,
making it one of the world's deepest capital markets.
Listings competition is intense, as highlighted by London
and New York battling each other when Saudi oil company Aramco
was considering an overseas float.
British electric van startup Arrival said on Wednesday it is
merging with CIIG Corp to get a U.S.
listing.
Faced with such competition, the London Stock Exchange, the
government and banking officials have launched a charm offensive
to persuade British online food delivery business Deliveroo to
list in London, sources have told Reuters.
Hill's review will make recommendations to the government
and the Financial Conduct Authority early next year.
Gavin Rochussen, chief executive of Polar Capital asset
manager, said there has been a big trend of companies opting to
raise capital privately rather than through a public listing.
"That has, I think, got to do with the listing rules, the
disclosure rules and so on... So I do think it needs
addressing," Rochussen said.
Hill will also look at requirements on companies drawing up
a prospectus for investors, review existing rules for secondary
listings, and rules that require companies to provide a "track
record" of their financial performance.
(Additional reporting by Simon Jessop and Abhinav Ramnarayan,
Editing by Alexander Smith, Kirsten Donovan)