London’s broken listings regime is pushing British firms out the door
Every firm that abandons its London listing makes the next departure more likely, says Paul Scully
During my four years as Minister for London, I championed our capital as a global business hub. I welcomed the work of the Treasury and the Financial Conduct Authority on reforms to make our markets more competitive. But as optimistic as I am, it’s too easy to see the power of our global hub erode through unintended consequences. I now watch with growing alarm as the rules designed to protect London’s markets are driving British companies away. The proposed Anglo American-Teck merger exposes a fatal flaw in our listing regime that could cost the UK billions in tax revenue and accelerate the exodus of British companies to North America, making Rachel Reeves’ difficult dash for growth even harder.
Last week Anglo American’s CEO refused to guarantee the company’s primary listing will remain in London long-term, stating he’s “not making any such pledge” despite currently planning to retain the LSE listing after their merger with Canada’s Teck Resources. The new company will disappointingly move its headquarters to Vancouver, but will remain incorporated in London with its primary listing on the London Stock Exchange (LSE). But for how long?
The combined entity faces ejection from Canadian indices because of its London incorporation, creating immediate pressure from index investors. When shareholder pressure mounts the gravitational pull toward Toronto or New York is likely to become irresistible.
Push factors
And that’s where Britain’s broken rules are creating a push factor that could prove catastrophic for the Chancellor.
Under the FCA’s current rules, UK companies with a primary listing overseas are not eligible for the UK’s secondary listing category. This secondary category, introduced in the FCA’s 2024 reforms, was “specifically designed to have a limited scope” and applies only to non-UK incorporated companies. UK incorporated companies that wish to have a secondary listing in the UK are expected to apply for the full commercial companies listing.
This technical distinction has enormous practical consequences. If Anglo American eventually moves its primary listing to Toronto or New York, a move which to me is looking increasingly likely, it faces a choice of either complying with the full burden of UK listing requirements, or moving its incorporation to outside the UK.
The second option means paying substantially less UK corporation tax and goes against everything that Rachel Reeves needs to deliver in November. We’re incentivising Britain’s largest companies to abandon their London listing, potentially sacrificing billions in future tax receipts.
The FCA’s approach puts the UK in the unenviable position that we welcome a loss-making Texan start-up like Fermi but cannot offer the same flexibility to British companies. The LSE has already fallen to 25th among capital-raising centres, with companies such as money transfer firm Wise making plans to move their primary listing to the US. Our rules discriminate against British companies and we have created a two-tier system where overseas firms receive privileged access to secondary listings while British firms face the decision to accept the full weight of UK listing requirements, or leave entirely.
It’s no secret that Rachel Reeves is looking at tax rises in the upcoming Budget, but before hiking up taxes even further we should be protective of those that we currently have. We should eliminate the exclusion of UK companies from the secondary listing category and embrace what the FT recently called a recognition that “second best beats nothing at all.”
The US Securities and Exchange Commission is consulting on rule changes to halt regulatory arbitrage by Chinese and offshore companies, potentially requiring dual listings on major exchanges outside the US that provide “meaningful regulation and oversight”. London is perfectly positioned to benefit, but only if we fix our rules to allow British companies the same flexibility we offer to foreign firms. Far from a weakening of standards, we should be recognising that in today’s capital markets, companies with significant North American operations will increasingly be drawn to listings in New York or Toronto. We should facilitate dual listings that keep companies incorporated in the UK, paying UK corporation tax and supporting UK jobs.
We have an opportunity to position London as the natural partner for US-based dual listings, but we must reform rules that benefit foreign companies over British ones
Every FTSE 100 company that maintains its UK domicile generates corporation tax, PAYE from highly-paid executives, VAT from professional services and the ecosystem effects that come from having major corporate decision-makers based in Britain. When companies like Flutter Entertainment moved their primary listing to New York in 2024 and when Ineos redirected investment away from Britain toward the US recently, on top of the listing fees, we lost yet more of the gravitational pull that makes London a global business capital and each departure makes the next one more likely. Anglo American’s CEO has made clear he won’t guarantee that London remains the place where the company is listed. His candour should be a wake-up call to the government and FCA that we cannot stand by while Chinese regulators have more say over our companies than we do and while our own rules push British companies abroad.
We have an opportunity to position London as the natural partner for US-based dual listings, but we must reform rules that benefit foreign companies over British ones. We must champion this reform as part of a broader agenda to restore Britain’s competitiveness. The alternative is watching Anglo American follow Arm, Wise and others in concluding that Britain’s regulatory structure makes continued UK domicile economically unsustainable.
Paul Scully is a former minister for London