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

48 Pages Posted: 16 Dec 2019 Last revised: 21 Apr 2020

See all articles by Bobby Reddy

Bobby Reddy

Faculty of Law, University of Cambridge

Date Written: November 29, 2019

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

Suggested Citation

Reddy, Bobby, Finding the British Google: Relaxing the Prohibition of Dual-Class Stock from the Premium-Tier of the London Stock Exchange (November 29, 2019). University of Cambridge Faculty of Law Research Paper No. 4/2020. Available at SSRN: https://ssrn.com/abstract=3495309 or http://dx.doi.org/10.2139/ssrn.3495309

Bobby Reddy (Contact Author)

Faculty of Law, University of Cambridge ( email )

10 West Road
Cambridge, CB3 9DZ
United Kingdom

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
75
Abstract Views
377
rank
338,717
PlumX Metrics