The Investment Association will, according to Sky News, call for the London standard listing segment to be renamed

City Editor
@ MarkKleinmanSky

The premium listing segment of the London stock market must maintain a “one-share-one-vote” structure in order to maintain shareholder protection The UK’s most influential investor organization warns of a move to make the UK a more attractive destination for multinational tech firms

Sky News has learned that the Investment Association (IA), whose members collectively manage £ 85trn in assets, will argue that the City Watchdog should consider renaming the London Stock Exchange’s “standard” listing category to avoid any reputational obstacles Eliminate companies who use them

According to insiders, the impact assessment will also require that a reduction of the 25% free float for listed companies to 20% over a period of three years be postponed to the higher threshold

A source familiar with the investor group’s proposals also said it would call for the IPO to be accelerated through more effective use of digital technologies

The impact assessment recommendations are undergoing a review this week led by Lord Hill, former EU Financial Services Commissioner and current non-executive director of the Treasury

For the past few weeks, Boris Johnson and Rishi Sunak have spoken of their desire to make the UK the most attractive place in the world, raising concerns among some institutional investors about the possible corporate governance compromises that may be required of this status

The IA’s warnings of wholesale reforms aimed at attracting fast-growing companies are likely to be heeded closely by Lord Hill’s review, given the influential voices of its members, which include Blackrock, Fidelity and Legal & General Investment Management

The source familiar with filing the impact assessment said it would argue against measures to encourage double-class share structures since THG Holdings – the parent company of Hut Group – listed a gold share agreement for its founder last fall Matthew Molding, already in place

“We do not believe that two class stocks should be allowed near the premium segment of the London market,” said one investor who helped filing the IA

Watchdogs should also focus on raising corporate governance standards in privately owned companies rather than lowering standards for publicly traded companies, according to the Impact Assessment

In addition, they should consider reforms aimed at encouraging SPACs (Special Purpose Acquisition Companies) to list in London after such vehicles raised tens of billions of dollars for acquisitions in US public markets last year

However, such a move would require adequate protection for investors, e.g. B. the ability for shareholders to vote on the assets acquired by a SPAC “and a mechanism to exit the investment if the management team or the SPAC cannot find an appropriate acquisition is not supported by the individual investor,” according to a source associated with the recommendations familiar with impact assessment

Ironically, Lord Hill’s review is being conducted against the backdrop of arguably the strongest pipeline of tech companies in London, with Darktrace, Deliveroo and TransferWise among the UK unicorns devising plans for an IPO

Still, London lags far behind the New York stock exchanges in terms of the volume of tech companies listed and the amount of fundraising featured there

One obstacle for fast-growing companies listed in the London market, according to investors, could be the perceived distinction between premium and standard categories that have different corporate governance standards

“The Impact Assessment is basically saying that they should be renamed to remove any incentive to use the standard list,” said one

Lord Hills review is expected to focus specifically on issues of free float and two-tier ownership structures

The City of London Corporation recently called for reforms to make the UK listing regime more competitive

“[The government should] conduct a regulatory review of the listing structure of stocks to ensure the UK’s competitiveness compared to other listing locations,” the company said last fall

“The aim should be to motivate stock listings in London, including within the technology sector, where competition is particularly fierce, while maintaining high corporate governance standards”

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