The FTSE has set tough new rules for foreign companies planning to list on its major indices, which will change the structures of a swathe of London flotations next year.
The move will help ensure that overseas companies that principally trade shares in the London market "play by the rules" of the UK and so protect City investors, according to leading bankers.
In order to qualify for inclusion in the prestigious FTSE 100, 250 and SmallCap indices, foreign companies will now have to sell at least 50 per cent of their shares in London. Previously, they only had to issue shares to the value of one-quarter of the firm.
The only way to avoid this more stringent regime, which ensures that no one party or concert of shareholders can control a foreign company, is to incorporate the group in the UK.
Russian companies could be particularly hard hit, according to advisers who have worked for Moscow. The Kremlin must approve decisions to incorporate strategic assets, such as commodities, overseas or plans to list a significant slice of them in foreign jurisdictions. Also, many of these companies have been built into major entities by owners who want to retain authority. "It's trickier for Russian companies," said one London banker. "Getting permission to offshore assets is complicated and some Russian owners don't like losing control."
Russian commodities giants that are looking to join the London Stock Exchange or upgrade their listings next year include the Siberian Coal Energy Company (commonly known as Suek), steel group Metalloinvest and gold and silver producer Polymetal.
However, some of these have already considered incorporating in the UK partly in recognition that the nationality regime was getting tougher.
Under the previous regime, which was discreetly amended through a "nationality practice note" update last week, overseas firms were not allowed to list if one shareholder or concert party was in control. But it has not always been easy to decipher firms' ownership structures, so the FTSE decided that selling half the shares will guarantee that no one party is in control.
"Controlling ownerships are a significant characteristic of certain countries but it wasn't really working for the UK," said a FTSE spokeswoman.
It emerged on Friday that Polymetal is seeking a primary listing worth up to $1bn on the London Stock Exchange. HSBC is understood to have been hired to develop the plans.