A major overhaul of the way companies list on the UK’s stock market has been proposed to head off competition from Europe.and boost its appeal to tech companies and SPAC groups.
Rishi Sunak, UK Chancellor, commissioned City grandee Lord Hill to chair the review, and said: “We wanted bold ideas.
“The Review has more than delivered and I’m keen we move quickly to consult on its recommendations, cementing the UK’s reputation at the front of global financial services,” said Sunak.
In the report, Lord Hill suggests a number of measures aimed at improving the City's appeal to technology and life sciences start-ups.
Proposals range from dual-class shares to allow founders to raise money without the risk of losing control of the business to reducing the free float requirement, or the amount of shares in public hands, to 15% from 25% currently.
Changes to the London Stock Exchange's (LON:LSE) standard listing segment are also recommended to take advantage of the growing fashion for SPACs (special acquisition vehicles) that are known in the US as blank cheque companies.
SPACs have become a huge market in the US and the idea is starting to migrate to Europe with Amsterdam currently the hub of activity.
Hill is recommending that the rules regarding SPACs are liberalised, with appropriate safeguards for investors.
READ: London stock market rules need overhaul to spark UK fintech IPOs, says Kalifa review
The LSE standard listing segment, which allows modestly capitalised acquisition vehicles, should be repositioned to allow the market to grow, the report recommends.
Lord Hill said: “The proposals we are announcing today are designed to encourage investment in UK businesses, support the development of innovative growth sectors such as tech and life sciences.
“The recommendations in this report are not about opening a gap between us and other global centres by proposing radical new departures to try to seize a competitive advantage. They are about closing a gap which has already opened up. All the recommendations are consistent with existing practices in other well-regulated financial centres in the US, Asia and Europe.”
Hill also said the City needs to keep working at improving its reputation, which is why he has recommended an annual state-of-City report.
This would bring together "Ministers, regulators and all sections of the market to ensure the whole system is working together to promote the attractiveness of the UK as an international financial centre".
The report also recommends measures to make it easier for companies to provide forward-looking guidance when raising capital; use technology to improve stewardship; updating the Financial Conduct Authority’s statutory objectives to include a duty to take into account the UK’s attractiveness as a place to do business; better information for investors’; improving the efficiency of the listing process; and addressing issues in the wider financial ecosystem.