Finding the British Google: Relaxing the Prohibition of Dual-Class Stock from the Premium-Tier of the London Stock Exchange

Abstract

There is a dearth of British tech-companies listing on the London Stock Exchange (LSE), and the LSE lacks a large, innovative tech-company such as Google. The UK-Government, concerned as to the loss of UK tech-companies to foreign acquirors, views the encouragement of UK tech-firm listings as a policy priority. Dual-class-stock, which is currently prohibited from the LSE Main Market’s premium-tier, allows founders to list their firms, and retain majority-control, while holding significantly less of the cash-flow rights in the company. In this article, the potential for dual-class-stock to attract UK tech-company listings will be broached, together with the benefits that such a structure can engender for UK tech-companies and their public shareholders. The risks of dual-class-structures will also be discussed, but it will be shown that in a UK-regulatory context, in relation to high-growth tech-companies, the risks may not be as severe as presumed, and easily moderated through judicious controls.

Keywords: Dual-Class Stock, Listing Rules, Long-Termism, One Share One Vote, Big Tech

JEL Classification: G30, G32, G34, G38, K22