British Airways owner International Consolidated Airlines Group (LON:IAG) and budget carrier Ryanair Holdings PLC (LON:RYA) have recently said they will look to restrict the ability of UK-based investors to buy shares if the country leaves the EU without a deal in a so-called ‘hard Brexit’.
In February, IAG said it would put a cap on its number of non-EU investors, a move that was replicated on Tuesday by Ryanair, although the Irish carrier went further saying that in the event of a no-deal Brexit it would class UK-held shares as ‘restricted’, preventing them from voting on resolutions like board appointments and company deals as well as buying any more shares in the company.
Dual-listed stocks in focus
If other firms that have dual-listed shares do follow suit, FTSE 100 firms like Paddy Power Betfair plc (LON:PPB) and building materials firm CRH PLC (LON:CRH) could all be prime candidates for a shift to Ireland, with both already having listings on the Dublin exchange.
Other heavyweights that might look to restrict ownership are dual-listee Royal Dutch Shell PLC (LON:RDSA) and Unilever plc (LON:ULVR), which already tried to shift its domicile out of the UK last year before making a hasty retreat on the back of a shareholder rebellion.
However, Russ Mould, investment director at AJ Bell, says that the airlines face a more immediate challenge from Brexit than most other dual-listed firms in the form of EU’s Open Skies Agreement, which states that in order to keep operating within the bloc a carrier must have over 50% of its shares owned by EU-based shareholders.
So could non-airlines be tempted to follow suit and place restrictions on UK investors? Mould says that other companies have less pressure to decide as they are not subject to such stringent requirements on their ability to operate.
He adds that a bigger issue would be “fund flows” and whether a hard Brexit could restrict their abilities to bring in capital and trade as freely as possible.