London to Tighten Rules on Listing

The WSJ reported today that the Financial Services Authority will raise the free float bar on listing shares in London. In May 2011, Glencore IPOed with only 13% of free float. Last year, Kazakh miner Eurasian Natural Resources ousted three directors who jointly owned 45% shares. London's reputation has suffered in recent years as many energy companies from Eurasian emerging markets managed to list through reverse takeovers or with minimal floats. When the free float (shares freely traded) is small relative to the total cap of the company, minority (public) shareholder rights are at risk. In China, foreign companies are minority shareholders by law. Recently, US companies learned the bad habits too. Instead of restricting float, they turned to supervoting shares (Zynga, Google, Facebook). Not good at all. If you want other people's money, you need to be willing to submit to their voting rights.