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CF > 1. MM Flotations > Flashcards

1. MM Flotations Flashcards

1
Q

What happens after publishing pathfinder?

A

Formal bookbuilding

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2
Q

What is a standard listing on MM

A

Comply w/ minimum standard of EU Directive

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3
Q

What is an institutional placing

A

New and existing shares to e.g. brokers

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4
Q

What is CREST

A

Ms hold e-share certificates for LCs, allowing electronic trading

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5
Q

Where are a sponsor’s responsibilities

A

LR 8.3 + 8.4

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6
Q

When is it 20 clear working days to submit docs to FCA before approval of prospectus

A

New issue

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7
Q

What applies (acronym) to issue new shares on listing

A

CADNB

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8
Q

Why does a company have to re-register as a public company to list

A

755 FSMA general prohibition

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9
Q

What is a ‘controlling shareholder’?

A

30%

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10
Q

What financial info must applicant have under LR Ch.6 to list

A

3 years

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11
Q

Two kinds of retail offering

A

Subscription and/or sale

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12
Q

Some cons of listing

A

Disclosure + reporting requirements, management time, change of BoD, CGC, costs and loss of control

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13
Q

What states that prospectus for non-IPO must be made public ASAP and reasonable time before offer/admission to trading

A

PR 3.2.2

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14
Q

What two changes must be made to the constitution of C if converting to plc under 90 CA

A

To name + AoA

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15
Q

21 FSMA applies to what

A

Cannot make a financial promotion unless exemption in FSMA (Financial Promotion)

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16
Q

What part of CA has prohibition against offering to the public

A

755

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17
Q

When must 48-hour listing docs be submitted to FCA by

A

By midday 2 BDs before FCA to hear app to admit listing

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18
Q

What 3 requirements does C have to comply w/ for shares to convert from Ltd to Plc under 90 (conditions of converting)

A

Minimum share capital of £50k + 1/4 NV paid up + 100% of premium

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19
Q

What is the correct terminology for shares going onto AIM

A

Admitted to trading

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20
Q

What is a global offering

A

Offering in more than 1 country

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21
Q

Time period over which listing on MM can span

A

6 - 12 months from day of appointing advisers to listing

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22
Q

What three committees does CGC recommend having

A

Audit, Nomination and Remuneration

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23
Q

What must the nature of the shares be under LR Ch.2 to list on MM

A

Duly authorised, admitted by LSE and freely transferable

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24
Q

What is the correct terminology for shares going onto MM

A

Listing

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25
Q

Benefits of premium listing on MM

A

Good reputation, easier passporting and encourages investment

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26
Q

What is used to avoid complying w/ regs in every J in a global offering

A

Exemptions

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27
Q

How do you subdivide existing share capital - M res

A

OR

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28
Q

What regime is a pathfinder subject to?

A

Advertising regime - PR 3.3

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29
Q

What is the ‘on-the-day’ doc

A

Sponsor submits shareholder statement before 9am on day FCA to consider app

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30
Q

Some pros of listing

A

Access to capital, market to trade shares, public profile, incentivise employees, liquidity + can retain control

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31
Q

What is a sale retail offering

A

Sale of existing shares by Ms

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32
Q

Why must rights of pre-emption be removed in AoA

A

To make shares freely transferable

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33
Q

Is it sufficient that a company secretary have a law degree?

A

No - needs a qualification, e.g. solicitor

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34
Q

What happens after prospectus docs have been submitted to FCA prior to 48-hour docs

A

Approval of prospectus + publish fixed price prospectus

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35
Q

For what listings on MM does the free float requirement apply

A

Premium and standard

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36
Q

Two kinds of institutional offering

A

Placing or through intermediaries

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37
Q

What is a premium listing on MM

A

EU minimum and UK standards (super-equivalent listing regime)

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38
Q

Timing consideration for institutional offering (compared to retail)

A

Fewer investors, identified early (unless global), so faster

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39
Q

What should you be careful of when deciding if 25% of shares are in public hands for listing

A

Not to include any exemptions under (3) for both standard (Ch.14) and premium (Ch.6)

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40
Q

Where is the comply (w/ CGC) or explain rule

A

LR 9.8.6R(6)

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41
Q

Three rounds of docs that will be submitted to FCA prior to listing

A

Prospectus, 48-hour listing docs and on-the-day docs

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42
Q

How does C convert from Ltd to plc

A

90 CA via SR

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43
Q

618 CA

A

OR to subdivide existing share capital

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44
Q

What changes might need to be made to the articles of a company when it becomes public

A

Change kind of articles - e.g. MA for private company no longer applicable

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45
Q

Is compliance w/ DTRs compulsory for all listings?

A

Yes

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46
Q

Why must pathfinder only be distributed to qualified investors

A

Exclusion under 86(7) FSMA, otherwise breaching 85(1)

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47
Q

How can control over company be retained despite listing

A

Selling 25% only (which is the minimum) - can still pass SR w/ remaining 75%

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48
Q

What two bodies does a C who wish to list have to apply to

A

LSE (to admit to trading) and FCA (for app to Official List)

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49
Q

Shareholder liquidity point for retail offering

A

Larger M base so greater liquidity - more people buying and selling

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50
Q

What market capitalisation is needed under LR ch.2

A

£700k

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51
Q

Provision on publishing price once established for price-range prospectus

A

PR 2.3.2R(2)

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52
Q

What provision states methods to make prospectus public after approval

A

PR 3.2.4

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53
Q

Two important PLPs before listing

A

PLP 5 treat holders of same share class equally, and PLP 6 ensure info communicated to Ms to avoid creating false market

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54
Q

What is the free float requirement for premium & standard listings

A

25% to be held in public hands

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55
Q

What happens after prospectus approved and published

A

Submit docs to FCA + LSE for admission hearings

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56
Q

What must the latest BS be for listing under LR Ch.6

A

No more than 6 months from prospectus and no more than 9 from admission

57
Q

What is required for a company to move from premium to standard listing on MM

A

75% of Ms to agree (as losing protection)

58
Q

What is an ‘introduction’

A

Moving shares from MM to AIM or other way around

59
Q

By when does sponsor submit Shareholder Statement to FCA

A

By 9am on morning FCA to hear app

60
Q

When is compliance w/ CGC compulsory - for what listings

A

Premium

61
Q

What is bookbuilding

A

Institutional investors show interest

62
Q

Why are the costs of listing a negative side

A

Uses up substantial proportion of cash from flotation

63
Q

Why does listing require significant investment of management time

A

Have to comply w/ all requirements whilst also managing business

64
Q

How does listing affect liquidity?

A

Gives objective valuation of company

65
Q

What is a retail offering

A

At least some shares offered to public

66
Q

What provision requires LisC to produce statement on relevant corporate governance code

A

DTR 7.2.1 + 7.2.2

67
Q

Two kinds of listing on MM

A

Standard and premium

68
Q

If company decides not to comply with CGC and to explain instead, where do they have to explain

A

In Annual Report

69
Q

Is an ‘introduction’ an offer?

A

No

70
Q

Cost point for retail offering

A

Expensive to offer to public as need to appoint bank to deal w/ apps + advertising costs

71
Q

How does listing lead to a loss of control

A

External influences + pressures + follow guidelines + keep investors happy

72
Q

Why is it good to comply with the CGC

A

Investors more likely to invest in the company

73
Q

When are CREST accounts credited

A

Day of admission

74
Q

Timing point for retail offering

A

Time-consuming - more marketing + processing apps

75
Q

What provision requires consolidated accounts if company to list has a subsidiary

A

LR 6.2.1R(4)

76
Q

Two ways a placing institutional offer may be done

A

Via Placing Letter + Agreement, or book built

77
Q

755 CA says what

A

Prohibition against offering to the public

78
Q

When is a receiving bank appointed to deal with applications - what kind of offering

A

Retail

79
Q

What does CGC say about make-up of board

A

1/2 of Board should be NED and independent

80
Q

How can you make shares a more marketable price upon listing

A

Subdivide existing share capital

81
Q

What should notice period be for Ds per CGC

A

One year

82
Q

Under what is a sponsor REQUIRED to list on MM

A

LR 8.2.1R

83
Q

When might the free float requirement not apply + provision

A

If FCA modifies (LR 6.14.5G)

84
Q

Three ways pathfinder restricted

A

Comply w/ advertising rules, only distribute to qualified investors, and counted as ‘financial promotion’ so only send to exemptions

85
Q

For what two things will AoA need to be amended

A

Remove rights of pre-emption and ensure constitution compatible with CREST

86
Q

Cost consideration for institutional offering over retail

A

Cheaper - offered through investment bank/broker direct to investors

87
Q

Does a pathfinder have to be approved by FCA?

A

No

88
Q

What part of LR contains LPs and PLPs

A

7.2R

89
Q

Who is usually the lead UW in a listing

A

Investment bank

90
Q

Two kinds of offering when listing on MM

A

Retail or institutional

91
Q

What provision states that prospectus must be approved before it is published

A

PR 3.1.10R

92
Q

When might a global offering be appropriate

A

To increase profile and/or strong presence in that country

93
Q

If shares are held by M on CREST through sponsored M, what does that mean?

A

Direct user appointed to communicate on M’s behalf, but M holds stock in their own name

94
Q

Two kinds of marketing documents for roadshows (if not using full prospectus)

A

Price-range prospectus and pathfinder

95
Q

When must LPs and PLPs be complied with - from when?

A

As soon as C listed

96
Q

What states that prospectus for IPO must be published 6 WD before end of offer

A

PR 3.2.3

97
Q

Where is ‘financial promotion’ in FSMA

A

21 FSMA

98
Q

Two examples of minimum standard for standard listing on MM, compared to premium

A

No 3-year accounting history, no sponsor

99
Q

Three ways Ms can hold shares on CREST

A

Directly, sponsored M or nominee

100
Q

273 CA requires what

A

Ds of Plc check CS has requisite knowledge + experience

101
Q

What intermediaries might institutional offering be with

A

Stockbrokers

102
Q

What LR Chapter deals with conditions relating to all shares (e.g. freely transferable)

A

2

103
Q

When do unconditional dealings commence

A

8am on morning of admission

104
Q

Provision on when to submit docs to FCA prior to approval of prospectus

A

PR 3.1.3(2)(b)

105
Q

What is the free float requirement for listing

A

Number of shares that must be held in public hands

106
Q

What is a price-range prospectus

A

Contains all info except exact price - range w/ criteria/conditions instead

107
Q

What is necessary to have with ‘controlling shareholders’ before listing

A

Must have relationship agreement w/ controlling shareholder

108
Q

What working capital must C have to list under LR Ch. 6

A

Sufficient working capital for next 12 months from date of publication of prospectus

109
Q

What is bookbuilding

A

Marketing shares to investors via bookrunners to get an idea of demand and set a realistic price

110
Q

Dual application to be listed on MM is what

A

Shares admitted to trading by app to LSE AND application to Official List by app to FCA

111
Q

What is an institutional offering

A

100% of shares sold to sophisticated investors

112
Q

What provision gives docs to submit to FCA for admission hearings

A

LR 3.3.2R

113
Q

Shareholder liquidity point for institutional offering

A

Fewer Ms holding larger number of shares - lower liquidity

114
Q

How does listing provide access to capital

A

Cash injection of money from selling shares to list to fund growth and/or reduce debt

115
Q

Where is ‘qualified investors’ defined

A

86(7)

116
Q

What happens if there is overlap between DTR and CGC

A

As DTR = mandatory, must comply

117
Q

Why might BoD have to change upon listing

A

Ds must have appropriate experience and expertise to comply w/ CGC

118
Q

When is a pathfinder commonly used

A

Institutional offerings

119
Q

What is a subscription retail offering

A

New shares

120
Q

What parts of CA state need minimum £50k share capital to be plc (2 parts)

A

91(1)(a) + 763

121
Q

Provision stating price-range prospectus to be approved by FCA

A

PR 2.3.2R

122
Q

What parts of CA state shares in plc must be at least 1/4 NV paid up + 100% premium (2 parts)

A

91(1)(b) + 586

123
Q

Under what part of CA do you subdivide existing share capital

A

618

124
Q

What chapter of LR relates to the conditions the applicant must fulfil before listing (premium listing)

A

Chapter 6

125
Q

What is a marketing tool to list on MM

A

Pathfinder

126
Q

Why do Cs have to convert from Ltd to Plc to list

A

Because of 755

127
Q

If a prospectus has to be used, when must docs be submitted to FCA

A

20 clear working days before intended approval date

128
Q

Most important LP to consider before listing

A

LP 1 - reasonable steps to have adequate systems in place

129
Q

What doc can present key info about C to potential investors in roadshows

A

Pathfinders

130
Q

When must prospectus be made public for IPO

A

6 WD before end of offer

131
Q

First step to list on MM

A

Publish pathfinder

132
Q

What does UW of listing do

A

Guarantees to purchase any shares not taken up, for a small fee

133
Q

What does compliance with LR 9.8.6R(6) mean - automatic compliance w/ what provision

A

DTR 7.2.3R

134
Q

When must docs be submitted to FCA + LSE for admission hearings

A

By midday 2 BD prior to listing

135
Q

What does UK CGC contain

A

Principles and Provisions for good governance

136
Q

What test under 85 would pathfinder breach if not solely distributed to qualified investors

A

85(1)

137
Q

Name four parties involved in listing

A

Investment bank, broker, sponsor, reporting accountants and solicitors

138
Q

Who is sponsor approved by

A

FCA

CF (11 decks)

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