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3 Minutes to Read (Adds reaction, background, graphic) (Reuters) – LONDON, July 5 (Reuters) – Following Brexit, Britain’s financial watchdog advocated making it simpler for digital businesses to list in London, in order to improve the capital’s capacity to compete with New York and the European Union. For the first five years after a listing on the London Stock Exchange’s premium division, the Financial Conduct Authority (FCA) has proposed allowing dual class share structures for “innovative, frequently founder-led enterprises.” Dual class share structures, which are popular in New York and Amsterdam, the EU’s leading share-trading center, allow firm founders to preserve power at the expense of ordinary shareholders. They are already available in London’s standard segment, but shareholder rights groups oppose their implementation in London’s premium section, where top businesses list. The FCA stated, “We have made it plain in our proposal that we would not accept artificial techniques to extend the 5-year period.” The FCA also proposed lowering the percentage of shares that must be made available to the general public, or free-float, from 25% to 10%. However, the minimum market capitalization for regular commercial enterprises in both the premium and standard divisions will be increased from 700,000 pounds to 50 million pounds ($69 million). Cutting the free-float while increasing the minimum capitalization would bring London into line with New York and other exchanges. The FCA reported that global capital raised through IPOs increased by 42 percent last year compared to 2019, with majority of the increase coming from the United States and China, while Britain’s share of global IPOs has been quickly declining in recent years. Clare Cole, the FCA’s head of market monitoring, stated, “Today, we are moving assertively to address the needs of a growing marketplace.” “While we continue to maintain adequate levels of investor protection, our proposals should result in a larger range of listings in the UK and increased choice for investors.” The measures, according to the LSE, are critical to maintaining Britain’s position as one of the world’s leading financial centers. Former European Commissioner Jonathan Hill, who led a government-backed review of listing laws, said it was encouraging to see momentum gathering to increase London’s appeal as a listing destination. The suggestions will be the subject of a public consultation until September, with final rules expected by the end of 2021. In order to keep up with a wave of SPAC (special purpose acquisition company) listings in New York and Amsterdam, the FCA is expected to issue final regulations for easing SPAC listings. (1 pound = 0.7227 pound) Huw Jones contributed reporting, and Kirsten Donovan edited the piece./nRead More

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