A company with no employees at all may go public

A scenario paper circulating among listing advisers works through what would happen if a company with no employees attempted an initial public offering. The company would have directors, because law requires them, and contractors, because reality requires them, but no staff. Its revenue would be generated by systems its founders had written and then stopped operating.

Most of the prospectus would be unremarkable. Revenue, margin, market, competition and risk all survive the absence of staff without difficulty. The section that breaks is key person risk, which exists to tell investors what happens if the important people leave. In this scenario the important people have already left, which the paper notes is either the strongest possible mitigation or the weakest.

Governance is where the scenario gets genuinely difficult. A board is supposed to supervise management. If management is a set of automated processes, the board is supervising software, and the paper spends several pages establishing that no director wants that sentence in the annual report next to their name and photograph.

“The company would have accountability,” a spokesperson for the advisory group would insist. “It would sit entirely with the board. We accept that this is a larger amount of accountability than boards are accustomed to holding, and we expect this to be reflected in fees.”

The audit problem follows immediately. An auditor tests controls, and controls are usually people doing checks. A company whose controls are code would require the auditor to assess the code, which is a different profession, and the scenario paper's proposed solution is a new category of attestation that does not yet exist and would take a decade to become trustworthy.

Investors, on the evidence, would not mind much. Revenue per employee has been climbing for years and the market has consistently rewarded it. A company that reports the metric as undefined because the denominator is zero would be, in purely financial terms, the logical endpoint of a trend that analysts have been praising since well before anybody found it unsettling.

No such listing has been attempted. But small teams already run revenues that would have required hundreds of people a generation ago, and the gap between a very small company and an empty one is now mostly a matter of how many resignations it would take.