Major changes should be made to London’s listings regime to encourage firms to choose the UK over rivals in the US and Europe, a new report says.
Company founders could maintain control over their firms after listing them on a London exchange under its proposals.
The new rules aim to close “a gap”, which has opened up between the UK and other trading centres post-Brexit and attract more firms to list in London.
Amsterdam overtook London as Europe’s top share trading hub in January.
Under the recommendations of the review led by Lord Hill (a former EU commissioner), companies should be allowed to sell so-called “dual-class” shares in the premium listing segment of the London Stock Exchange.
The move would allow company founders to keep control over their companies by giving them deciding votes on big decisions such as mergers and takeovers.
The report also recommended reducing the proportion of a company’s shares that must be publicly traded from 25% to 15%, and that the chancellor should report to Parliament on the state of the City of London every year.
Lord Hill said the proposals were designed to encourage investment in UK businesses, benefit companies who choose to float in London and improve the UK’s competitive position”.
“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,” he said.
“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 USA, Asia and Europe.”
Chancellor Rishi Sunak welcomed the publication of Lord Hill’s review ahead of Wednesday’s Budget.
“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 UK is currently trying to carve out a role for the City of London after Brexit.
Financial services – a key driver of the UK economy – were largely omitted from the last-minute Brexit trade deal agreed in December.
The City generates about £135bn in business annually, with financial institutions earning big fees from trading stocks and shares.
But in January, Amsterdam overtook London as the biggest share trading centre in Europe, while shares traded through the UK dropped significantly after the end of the Brexit transition period.
About €9.2bn (£8.1bn) worth of shares were traded on Amsterdam exchanges each day, against €8.6bn in London.
Following new Brexit rules, EU-based banks wanting to buy European shares currently cannot trade via London, meaning a loss of fees for City firms.