Founders to retain more control of companies listing on stock market

Former EU finance commissioner recommends wide reforms to loosen rules that have tightly governed listings in Britain

Britain could become the premier market for stock market flotations by tech founders if listings rules are liberalised and simplified, according to a Government review.

Former EU finance commissioner Lord Jonathan Hill said that founders will be able to keep more control of companies that float on the London stock market under proposals intended to boost the City after Brexit.

Rishi Sunak asked Lord Hill of Oareford in November to review the listings rules to boost Britain’s competitive position.

>See also: Future Fund: Breakthrough – £375m fund for tech scale-ups to launch

Lord Hill has recommended a wide range of reforms to loosen rules that have tightly governed listings in the UK.

His report includes proposals for dual-class shares to allow founders to keep control over their companies by giving them deciding votes on decisions such as corporate takeovers.

The proposal is likely to prove controversial among shareholder groups who fear that ordinary investors’ power will be reduced as a result.

>See also: Rishi Sunak review moots £1bn fintech growth fund

The free float requirement — the amount of a company’s shares that are in public hands — would be reduced from 25 per cent to 15 per cent.

Hill said that Britain had many strengths in the corporate world but should focus on emerging businesses to shore up its future.

In a letter accompanying the report, he wrote: “The most significant companies listed in London are either financial or more representative of the ‘old economy’ than the companies of the future. At one point last summer, Apple alone was worth more than the combined value of every company in the FTSE 100.”

Britain has strengths in life sciences and technology, he wrote, but “too few of the innovations we have seen have led ultimately to UK companies coming to the public markets in London”.

Responding to the Hill review, Chancellor Rishi Sunak said: “We asked Lord Hill to lead this review because we wanted bold ideas. The UK is one of the best places in the world to start, grow and list a business – and we’re determined to enhance this reputation now we’ve left the EU.

“That means boosting the UK’s business environment and making sure we continue to lead the world in providing open, dynamic capital markets for existing and innovative companies alike, whilst protecting the high standards that underpin our status as a world-leading financial centre.

“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.”

Further reading

33 fastest-growing tech start-ups in Britain in 2021 – are you one of them?