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Multiple Listings in the Frame

Damage seems to have been inflicted recently to the cross-border reach of a company’s shareholder population by the EU ruling, unhelpfully, over the situation of dual-listed companies after Brexit.

Some companies, either for historical reasons or through acquisitions, have both loyal shareholders and centres of gravity in different countries. As a result, they have preserved stock exchange listings in those markets. More often than not, these have resulted in additional complexity for company secretaries and boards, for example the need for split Annual General Meetings.

Apparently, the EU intends to interfere in a situation where a company has a listing in London and a member EU market. After Brexit, an EU fund manager would have to trade on the EU listing rather than London. At the moment they have a choice. The problem lies in the inconvenient fact that the London listing frequently enjoys better liquidity and keener prices. So, if a fund manager was to comply with the new diktat, they could provide their clients with inferior prices.

Many companies have brands that exceed the scope and value of their local stock exchange and historically have looked for additional listings in foreign markets with the reach and capital to support their needs. There have always been barriers to cross – in regulation, accounting standards and different formats for shares preferred by their investors. And there are markets denominated by Reserve Currencies that require further regulatory interference by authorities.

However, this planned retrospective action on company listings struggles not to appear vindictive.

If not an “Iron Curtain”, is there not a danger of a Flemish Tapestry being drawn around the borders of the European Union?

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