The UK will announce stricter rules for companies going public on the London Stock Exchange, which will allow companies to be banned from listing for national security reasons, the Treasury Department said Tuesday.
In a statement on Tuesday, a Treasury Department spokeswoman said: “The UK’s reputation for clean, transparent markets makes it an attractive global financial center.
“We plan to reinforce this by targeting new powers to block listings that pose a national security risk and will launch a consultation in the coming months to inform the design.”
Proponents say it could attract much-needed investment to the UK as tech companies are encouraged to choose London over places like New York to list their stocks.
However, some fear it could lead to more accounting scandals as boards of directors might be less accountable to investors.
They also argue that after scandals at companies like Carillion, NMC Health and Tesco, the City Watchdog, the Financial Conduct Authority, is lacking teeth to regulate companies as closely as their counterparts in the US.
Under the Treasury’s national security proposals, companies owned by people whose activities could harm the UK’s interests could also be prevented from selling stocks in the London market.
The new rules would focus on key strategic areas such as technology, defense and national infrastructure.