A leading international corporate governance group has warned UK Chancellor of the Exchequer against adopting a dual class share regime and lowering free-float standards as part of his plan for regulation to make the UK more attractive to business.
In response to a speech by Rishi Sunak last week on the future of British finance
and how regulation would diverge from EU rules after Brexit, the
International Corporate Governance Network (ICGN) wrote to him saying it
was concerned the quality of regulatory standards may be under threat.
In his speech, Sunak, the UK’s finance minister, had said that as
part of a series of reviews the government was undertaking “to ensure
regulation enhances the UK’s attractiveness to business and position as
global financial hub”, it would set up a taskforce to propose reforms to
the UK listings regime.
The aim of these reforms would be “to attract the most innovative and
successful firms and help companies access the finance they need to
grow,” he said.
The ICGN – an investor-led coalition of governance professionals
which includes many major asset owners as members – said that although
Sunak’s statement itself provided little detail about the planned review
of the UK listing regime, it had been widely reported that it would
consider the introduction of a dual class share regime and lowering
current free-float standards.
“Our message to you is that such developments would be unwelcome by a
substantial number of institutional investors globally – who are
critical stakeholders in the ecosystem of the UK’s financial markets,”
the network said.
“We are concerned in particular that we are witnessing a ‘race to the
bottom’ by major global stock exchanges seeking to attract listings by
watering down governance safeguards,” the ICGN wrote.
IPE
© IPE International Publishers Ltd.
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