Magazine article The Spectator

London Is the Liberia of Listings

Magazine article The Spectator

London Is the Liberia of Listings

Article excerpt

Byvanquishing Nasdaq, the London Stock Exchange has yet again fought off falling into foreign ownership.

But what does it matter who owns the exchange when so many of the companies listed there are from overseas? London has become a listing of convenience for companies with no connection to Britain, no need to comply with the country's laws and no compulsion to pay taxes here.

Indeed, having got their shares listed on one of the world's leading exchanges, many of these companies will never have reason to set foot on British soil again. London is becoming to quoted companies what Liberia is to shipping.

In its dash for growth, not least to thwart its succession of bidders, the LSE has proved willing to lend its name to companies from all over the world seeking a prestigious share listing. Last year alone there were two flotations every week by foreign companies wanting to join the London market -- with a different country coming to the capital every other week.

Half the money raised on the London market went to those 99 companies that preferred to list in Britain rather than on their own local markets or on any of the world's other major exchanges.

That so many international companies want to sell their shares in London may seem a good thing for a British economy that depends on the City's earnings from abroad to finance the deficit on tangible trade. But these companies' love of London goes no further than the Exchange's willingness to accept them with few questions asked. Almost three quarters of last year's foreign listings were on Aim, the alternative market to which full LSE listing rules do not apply.

Investors who subscribe for these shares should not bank on seeing much of the newly listed companies' directors. More than a third of last year's foreign Aim listings were Chinese: don't expect regular presentations or press conferences to explain their results.

And unless you're particularly intrepid, don't plan to attend the AGM either: there are now almost three dozen Russian companies listed on London's main market and nearly as many on Aim, but to take part in the meetings of the likes of Lukoil or Gazprom means flying to Moscow. So much for shareholder democracy, never mind the distance involved in collaring a director over white wine and a sandwich.

That these companies have chosen London only for its ease of listing is evident by their pick-and-mix attitude to the world's legal, fiscal and regulatory regimes. …

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