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Equity Finance July 2019 > 3) Alternative Structures > Flashcards

3) Alternative Structures Flashcards

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1
Q

What are the 3 types of listing?

A
  • AIM
  • Standard Listing
  • Premium
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2
Q

What type of company must a company be for all types of listing?

A
  • Public company

- LR 2.2.7 (for standard and premium)

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3
Q

Can there be any restrictions on the free transferability of shares for any type of listing?

A
  • No there can NOT be any restrictions.
  • AIM Rule 32
  • LR 2.2.4
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4
Q

For which type of listing is a NOMAD and nominated broker required?

A
  • Just AIM - Rules 1 and 35
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5
Q

For which types of listing do the applicants have to appoint a sponsor related to admission documents / certain continuing obligations?

A
  • Just PREMIUM listings have to appoint a sponsor - LR 8.2 (purple tabs to the far left = role of the sponsor)
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6
Q

Fro which types of listing to applicants have to comply with the rules of the LSE?

A
  • Just standard and premium
  • LSE admission and disclosure standards do NOT apply to AIM - but the rules do apply to member firms of the LSE.
  • Cover trading in AIM securities.
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7
Q

Which sort of listing applicants need to comply in FULL with the DTRs?

A
  • Non of them
  • For standard - only parts of the LRs apply
  • Some LRs related to standard listings do not relate to premium listings.
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8
Q

For which types of listing do 25% of applicant shares have to be held in public hands at the time of admission?

A
  • Standard and premium
  • Standard - LR 14.2.2
  • Premium - LR 6.14.2
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9
Q

For which type of transaction will Class 1 transactions require shareholder approval?

A
  • Just premium - LR 10.1.1
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10
Q

Which types of market have regulated market status?

A
  • Standard - LR2.2.3

- Premium - LR2.2.3

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11
Q

Is AIM a ‘regulated market’?

A
  • No it is not

- Only standard and premium are

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12
Q

Which type of markets are regulated investment exchanges? RIE? What does this mean?

A
  • All of the markets are recognised investment exchanges but AIM is not ‘regulated market’
  • RIE = prescribed market under FSMA
  • AIM companies are NOT ‘quoted companies’ under FSMA
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13
Q

Which type of market has to have compliance with the related party transactions rules?

A
  • Just premium - LR 11.1.1
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14
Q

Which markets have a rule that state applicants have to publish their annual audited accounts no later than 4 months after the end of the financial period to which they relate?

A
  • Standard and premium
  • DTR 4.1.3
  • CA states this period is 6 months in s442(2)
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15
Q

When do AIM market applicants have to publish their audient accounts?

A
  • 6 months

- Aim Rule 19

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16
Q

For which markets can a company be fined / censured and the admission of securities cancelled if the company contravenes continuing obligations?

A
  • All of them
  • AIM Rule 42
  • Standard / premium = SS 89k / 91 FSMA
  • And also DTR 1.4 / LR 5.1.2G
17
Q

What are the 7 advantages of floating on the AIM rather than Main Market?

A

CORN CUP

C apitalisation - no minimum market capitalisation
O bligations - no continuing obligations in LRs and DTRs
R ecord - no trading record required
N umber - no minimum number of shares need to be in public hands at any given time

C heaper and faster process
U nquoted - so tax reliefs for individual and corporate shareholders. CGT / IHT reliefs.
P rospectus not needed as not a regulated market.

18
Q

What are the 7 DISADVANTAGES of admission to the AIM market?

A

NAB 7L CRAP
NAB - nominated advisor and broker at all times under the rules.

7 - rule 7, lock-in requirement
L - less liquid (drier) market with fewer investors

C autious - could make investors more cautious
R iskier market
A IM rules to comply with and AIM admission document
P rofile - generally is lower

19
Q

How come we do not fall under the prospectus test for offer of securities to the public for AIM

A
  • Automatically does not past test 2
  • But with test 1, there is an offer of transferable securities to the public.
  • Limited number per EEA state
  • AIM admission meets the exemptions generally
  • So can use AIM admission document without the contribution of the FCA.
20
Q

Why is an AIM admission doc used rather than a prospectus?

A
  • AIM companies fall within an exemption, as 85(2) FSMA applies to those whos shares admitted to trading on a regulated market - AIM is not a regulated market
  • Does not have to be approved by the FCA
  • But if securities are being offered to the public - will need a prospectus.
21
Q

What are the specific and general contents requirements for AIM admission doc?

A
  • General - should disclose the info that is in schedule 2 of the AIM rules.
  • Does not need approval of the FCA.
22
Q

Who decides whether a company is a suitable applicant for admission to AIM?

A
  • Nominated advisor
  • Has to be satisfied that the applicant and its securities are appropriate to be admitted to AIM
  • Has to comply with prescriptive lists of due diligence checks in AIM rules for nomads
23
Q

Are there market capitalisation requirements for AIM admission?

A
  • No there is not

- Unlike listing on Main Market

24
Q

Who takes responsibility for the AIM admission document?

A
  • Lawyers for the applicant will draft the admission document.
  • AIM and the NOMAD are very keen to keep their reputation up
25
Q

Are AIM Companies listed companies?

A 
NO
AIM companies are not listed companies 
they are not a regulated market 
but they are prescribed 
and they are RIE - recognised investment exchange
26
Q

What are the potential types of tax benefits from investing in AIM companies?

A
  • unquoted shares - benefit from CGT / IHT benefits (reliefs)

Entrepreneurs relief also

27
Q

Does the company preparing to seek admission to AIM market prepare the dealing notice?

A
  • No, AIM admission becomes effective once the exchange issues a dealing notice to that effect. (rule 6)

Equity Finance July 2019 (9 decks)

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