Sarbox boosts stock exchange flotations

A reluctance to grapple with the onerous corporate governance rules in the US
may have contributed to the London Stock Exchange’s best month for flotations in
four years.

June saw 15 IPOs on the LSE’s main market raising £1.9bn, the highest value
since July 2001. But as well as the attractions of liquidity on UK markets, some
companies are choosing London because of regulation that is much less burdensome
than in the US and its now infamous Sarbanes-Oxley Act.

Martin Graham, director of the LSE’s market services, said that
‘Sarbanes-Oxley has undoubtedly assisted our efforts’, and emphasised the
market’s ability to draw new listings from foreign companies.

‘We have also been promoting the advantages of a London listing more
aggressively in our key target markets of China, Russia and India over the last
12 months, and are starting to see the fruits of this effort with a good flow of
international companies joining both the Main Market and AIM.’

The views follow a torrid time for Sarbox. Last week, congressman Michael
Oxley, one of the main architects of the act, confessed he believed that some of
the reforms in the legislation were ‘excessive’.

That came just two days after a senior US judge attacked the act saying that
it could soon raise company costs to a level at which they outweigh any
potential benefits.

That blow was preceded by news at the beginning of the month that the Rank
Group could delist from Nasdaq. The company revealed that the costs of its US
listing had reached £2.1m a year, more than half of which went toward paying
audit fees associated with Sarbanes-Oxley regulation.

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