Government is readying another major shakeup of UK listing rules to tempt tech firms into listing in the capital, City A.M. understands.
Number 10 consulted with a number of tech bosses this week and is mulling over strategies designed to make the UK a more attractive place to grow publicly listed tech businesses in the five to ten years after flotation.
The strategies under consideration include mandatory opportunities for individual investors to participate in listings, loosening of restrictions of analyst research on listed businesses, and targeted tax incentives that would encourage investors to back listed tech firms.
Tech bosses are also reportedly keen to activate one of the recommendations of Lord Hill’s review of the listing regime last year which would see the Chancellor present an annual report to parliament on the state of the city, outlining the steps that have been taken to promote the attractiveness of the UK as a global financial centre.
Any changes to tax rules are likely to mirror the structure of the Enterprise Investment Scheme (EIS) which allows investors to claim tax relief on investment into smaller firms.
Ministers are reportedly keen to replicate the success of the EIS, which has led to a boom in investment in startups, and may roll out similar incentives to encourage investors to back listed tech firms.
Government is also understood to be exploring ways to increase research analysts’ coverage of tech businesses to encourage investment.
Research on many firms has been restricted by MiFID II legislation introduced in 2018, which forced firms to ‘unbundle’ research from other services such as execution.
Government has already announced exemptions of the rules from March for firms under £200m market capitalisation, and tech bosses at the meeting this week were reportedly pushing for the government to raise this cap.
The summit featured founders from firms including Checkout.com, Klarna and PensionBee, as well as Lord Hill and Ron Kalifa who led major reviews of the sector last year.
Romi Savova, CEO of PensionBee said the meeting was an important step toward making London a place where businesses can flourish.
“I am pleased that the Government is engaging with tech companies as part of looking ahead to reviewing the London listing environment,” she said.
“Now more than ever we have the chance to ensure the regime continues to make London a brilliant place for companies to flourish.”
The examination of the listing rules follows a major review of the regime led by Lord Hill last year which was designed to make the UK a more attractive place for companies to go public.
The Government has already introduced a number of measures following the review, including the introduction of dual class share structures which allow founders to retain more control of their business after flotation.