Author: Syedur Rahman 9 June 2021
Syed Rahman of financial crime specialists Rahman Ravelli considers the thinking behind the proposal.
Plans are being drawn up to use national security as grounds for preventing companies from listing on the London Stock Exchange.
Chancellor of the Exchequer Rishi Sunak plans to begin consultations this month on proposals for stricter rules on flotations. The move has been prompted by growing fears of the rise of businesses that are backed by “dirty money”.
The UK Listing Authority, which is part of the Financial Conduct Authority (FCA), decides which companies can be listed on the Stock Exchange. It has been reported that the Chancellor is now looking to strengthen those powers by taking into account the issue of national security.
A Treasury statement explained: "The UK's reputation for clean, transparent markets makes it an attractive global financial centre. We're planning to bolster this by taking a targeted new power to block listings that pose a national security risk and will launch a consultation to inform its design."
Rishi Sunak had previously said that Britain will revise its listing rules to attract more high-growth company and blank cheque flotations. The FCA has stated it will use its freedom from European Union rules to regulate markets more flexibly and has outlined proposals to change its current regime to make it more attractive to SPACs (special purpose acquisition companies).
It should be remembered that there are already legal measures in place to verify sources of funding. The UK also implements stringent sanctions and anti-money laundering controls. The issue, as usual, is how rigorously such measures are enforced.
The proposals that are currently being talked about would send out a message about the importance being placed on clean and transparent markets. But they need to be devised so that they do not deter international investment.
Syedur Rahman is known for his in-depth experience of serious fraud, white-collar crime and serious crime cases, as well as his expertise in worldwide asset tracing and recovery, international arbitration, civil recovery, cryptocurrency and high-stakes commercial disputes.