The City is missing out on technology flotations and needs to reform if London is to bounce back from Covid-19

The City of London Corporation is a peculiar council.

Part elected by its few thousand residents, part by the companies within its boundaries, it is a relic of medieval times, even remaining outside the authority of Parliament.

That said, it sometimes operates like Downing Street.

Last night, for example, rather than wait until it publishes its crucial report on how to renew the City post-Covid, it leaked it to the FT.

Much to the annoyance of the London Stock Exchange and City regulators it seeks to reform, who first learned of it this morning.

That’s a pity, because some of the ideas are good.

Take its proposed reforms to attract more big tech companies to float here.

Currently, most shun London for the US when they IPO. Some of the reluctance to launch here is down to our tough listing rules.

Here’s the problem: many tech founders fear that when they sell shares on the public markets, they could be forced by their new investors to do stuff they don’t want to do. So they give themselves a special class of shares that outweigh the power of all the others.

In the UK, for a gold standard “premium listing”, such dual classes of shares are prohibited. You can, as The Hut Group just did, get an ordinary listing, but you won’t get in the FTSE 100. So many big funds won’t invest and the founder’s ego takes a hit.

Big fund managers don’t want the rules relaxed because they like the strong governance of the premium London listing. But then they’ll happily go and buy Facebook and Twitter shares in the US, where no such rules exist.

We need to carve a middle course; perhaps allowing premium listings for founders whose special share status expires within a given time, or where the tycoon’s vetos only cover certain events.

It’s ironic that it’s taken the tradition-bound Corporation to inspire such radical thoughts.

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