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CF > 4. Secondary Share Issue > Flashcards

4. Secondary Share Issue Flashcards

1
Q

What happens day after RI offer closing

A

Announcement to RIS

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2
Q

Two methods of making RI

A

Gazette Route and Disapplication Route

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3
Q

When is UW agreement dated for secondary share issues

A

Eve of admission - as for flotation

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4
Q

What happens in right issue if not all shares sold

A

Lead UW instructs broker to sell rump, and then if not sold, lead UW purchases stick

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5
Q

When is authority for secondary share issues usually acquired

A

At AGMs - anticipating need

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6
Q

What is the nature of application form for OO - tradeable?

A

Non-renounceable

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7
Q

What does company receive if M lets rights lapse in RI and broker sells on M’s behalf

A

Rights issue price - M receives premium on top

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8
Q

When is there a step to take before impact day - what kind of SSI

A

Placing

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9
Q

Four options for Ms in rights issue

A

Take up rights, sell rights, let rights lapse and a combination

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10
Q

2 principal reasons why pre-emption rights disapplied

A

Overseas Ms + fractional entitlements

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11
Q

By when must stick be sold for rights issue

A

5 WD

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12
Q

What do overseas Ms receive when pre-emption rights disapplied for them

A

Premium

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13
Q

What is used for open offers instead of PAL

A

Application form

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14
Q

What additional restriction does PEG put on placing in terms of percentages over years

A

7.5% for general in 3-year rolling period

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15
Q

When are CREST accounts credited for RI

A

Usually day 1 of offer period

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16
Q

SCM Guidelines on authority to allot for placing

A

1/3

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17
Q

When is GM notice period shortened + what resolution

A

At AGM - by SR

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18
Q

PEG on disapplication of pre-emption for placing

A

5% generally + 5% additional for acquisition/specified capital investment

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19
Q

Is a GM required if within current authority

A

No

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20
Q

Two provisions on AGM notice period

A

307A(1)(b) + 360(1)

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21
Q

What is a rights issue

A

Offer to existing Ms to subscribe for shares in proportion to existing holding via PALs

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22
Q

Two kinds of business dealt w/ at AGM

A

Special and ordinary

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23
Q

What kind of companies does 307A apply to

A

‘Traded’ - MM, not AIM

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24
Q

When must the sale of fractional entitlements and overseas Ms’ shares be done by in RI

A

Closing of offer

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25
Q

What LR provision gives 2 principal reasons why pre-emption rights disapplied

A

LR 9.3.12R(2)

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26
Q

SCM Guidelines on authority to allot for OO

A

1/3 of ISC

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27
Q

What is a PAL and what does it mean

A

Used to trade rights to shares before they are issued

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28
Q

What is the issue of pre-emption rights for overseas Ms

A

Need to comply w/ other Js’ securities laws and costly to follow Gazette Route

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29
Q

Pre-impact day steps for placing

A

Obtain indications of interest

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30
Q

What wording excludes pre-emption rights for overseas Ms

A

Excluding ‘legal and practical problems’

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31
Q

Member res required to disapply 561 pre-emption rights

A

SR

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32
Q

What is ‘tail swallowing’

A

In RI when M sells part of rights to buy remainder

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33
Q

Why do a secondary share issue?

A

To raise money for C

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34
Q

Do SCM and PEG have legal force?

A

No

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35
Q

If Gazette route, how must offer be sent

A

Hard copy/electronically

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36
Q

How long can RIS announcement after RI offer closing be delayed by if UW

A

2 BD, until rump sold

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37
Q

What is an open offer

A

Offer to existing Ms to purchase shares in proportion to holdings, but not by PAL

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38
Q

When is UW agreement signed for secondary share issues

A

As for flotation - day before impact day

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39
Q

Why is prospectus likely for RI

A

85(1) can’t be restricted to institutional, and 85(2) bc likely more than 20%

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40
Q

For what SSIs can GM notice period be folded into offer period

A

OO and placing

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41
Q

What is the discount on an open offer restricted to

A

10%

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42
Q

If using both general and additional allowance for placing under PEG, same or separate resolutions

A

Separate

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43
Q

Provision on last date for acceptance of RI

A

LR 9.5.6R

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44
Q

What happens if Ms let their rights lapse in a rights issue

A

Broker will sell + pay any premium to M

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45
Q

Which pre-emption issue does not use PAL

A

Open offer

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46
Q

What is discount of placing shares actually limited to

A

5%

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47
Q

What are pre-emptive issues

A

Share issued to existing Ms in proportion to shares currently held

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48
Q

For what SSI is prospectus unlikely

A

Placing

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49
Q

What are the two pre-emptive issues

A

Rights and open offer

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50
Q

When is there no restriction on discount for both placing and OO

A

M approval or 570 authority

51
Q

Provision on announcement to RIS day after RI offer closes

A

LR 9.5.5R(2)

52
Q

What pre-emptive issue is usually underwritten

A

Rights issue

53
Q

SCM Guidelines on authority to allot for RI at AGM

A

2/3 of initial share capital

54
Q

What limits discount of placing shares to 5%

A

PEG part 2B

55
Q

What happens if M has no reg address in EEA for Gazette Route

A

Publish in London Gazette

56
Q

Why can’t GM notice period run w/ offer in RI

A

Bc PALs are nil paid rights - traceable securities

57
Q

How many BDs in total for RI - time for acceptance

A

11

58
Q

Why is it unlikely RIS announcement can be delayed for 2BD for placing + OO

A

No rump

59
Q

How are 10 BD before issue counted for prospectus

A

Clear days - per FCA

60
Q

What is the discount restricted to for placing according to LRs

A

10%

61
Q

When does trading in NPR start

A

Admission day

62
Q

What defines a rights issue

A

LR APP 1

63
Q

What CA provision for authority to allot

A

551

64
Q

When are PALs sent to Ms if GM required for RI

A

After GM held + authority obtained

65
Q

What is the only difference in RI on impact day if there is no GM required compared to if GM required

A

If no GM, PALs sent out on impact day

66
Q

What is the influence of SCM + PEG

A

Ms likely to vote against res if not followed

67
Q

What happens if OO and M lets offer lapse

A

Usually no selling arrangement for broker to sell on M’s behalf

68
Q

What does the company receive when overseas Ms have their rights disapplied in pre-emption

A

RI price

69
Q

What PR provision states prospectus if share issue of more than 20%

A

PR 1.2.3A

70
Q

Is there a minimum offer period for placing

A

No

71
Q

For which SSI is there no minimum offer period

A

Placing

72
Q

In what secondary share issue is a PAL used

A

Rights issue

73
Q

When is the last date for acceptance of RI

A

10 BD after Impact Day

74
Q

By when must the rump be sold for rights issue

A

2 WD

75
Q

CA provision requiring AGM to be held

A

336(1)

76
Q

SCM Guidelines on disapplication of pre-emption rights for RI at AGM

A

2/3 of initial share capital

77
Q

Why is prospectus unlikely for placing

A

85(1) to institutional investors + 85(2) unlikely more than 20%

78
Q

What usually happens for notice period of GMs of LisC + provision

A

Reduced to 14 at every AGM - permitted under 307A(4)

79
Q

What is ‘special’ business?

A

Authorisations for potential future issues

80
Q

What is the effect on existing Ms of placing

A

Dilutes existing Ms’ shareholdings

81
Q

How do buyers confirm purchase for placing

A

Sign Placing Letter

82
Q

Why is GM usually held after offer period, if the two can run together

A

Notice period usually longer than offer period

83
Q

LR provision for pre-emption rights

A

LR 9.3.11R

84
Q

When can announcement to RIS after RI offer closing be delayed

A

If underwritten

85
Q

Why can GM notice period run concurrently with offer in OO

A

Application form is non-renounceable

86
Q

How do Ms sell rights in rights issue

A

Renounce in favour of broker (‘nil paid dealing’

87
Q

CA provisions for Disapplication Route

A

570 + 571

88
Q

What guidelines apply for authority to allot + disapplication for both pre-emptive offers

A

SCM Guidelines

89
Q

What issue do Ms prefer and why

A

Rights issue as can benefit even if lazy

90
Q

What happens for pre-emption rights being excluded for fractional entitlements

A

Fractional entitlements sold to other Ms

91
Q

When is circular sent to Ms in RI

A

On impact day

92
Q

SCM Guidelines on authority to allot for placing

A

1/3

93
Q

To what two types of secondary share issues do Gazette and Disapplication apply to

A

OO and RI

94
Q

How is impact day different for OO compared to RI

A

Application form sent to Ms both if GM required and if not

95
Q

Under what CA provision if Gazette Route

A

562

96
Q

What is a placing defined as

A

Shares marketed to specific persons, client of sponsor or securities house

97
Q

What parts of CADNB rarely apply for SSIs and why

A

C (few LisCs have caps) and N (usually new OSs issued so not new)

98
Q

What is the trend of discounting for rights issues

A

Heavily discount, e.g. 60%

99
Q

CA provision for pre-emption rights

A

561

100
Q

How do Ms take up rights in rights issue

A

Send back acceptance form in PAL/instruction through CREST

101
Q

What is the period for GMs of LisC per CA (if no SR passed)

A

21 CDs

102
Q

Time to publish RI offer in London Gazette

A

Not less than 14 days

103
Q

What is the non-pre-emptive issue

A

Placing

104
Q

What is in circular for RI

A

Reasons for RI, Ts&Cs

105
Q

Is there a limit on possible discount for rights issue

A

No

106
Q

What are the rights contained in a PAL called

A

Nil paid rights

107
Q

Downside of secondary share issue (for Ms)

A

Risk diluting shareholding

108
Q

Two options for Ms in OO

A

Take up offer and let offer lapse

109
Q

Who must announcement of RI be made to and per what provision

A

RIS per LR 9.5.5R(1)

110
Q

SCM Guidelines for disapplication of pre-emption for OO

A

1/3

111
Q

When must prospectus be submitted for secondary share issues

A

10 BD before intended approval

112
Q

Notice period for AGM

A

21 clear days

113
Q

What LR provision states what happens when pre-emption rights disapplied depending on value of fractional entitlement

A

LR 9.5.13

114
Q

Under what provision does it state that if M lets rights lapse in rights issue, broker will sell and pay premium to M

A

LR 9.5.4R

115
Q

When is the discount on an open offer not restricted, and provision

A

If specifically approved by Ms or 570 disapplication - LR 9.5.10R

116
Q

If pre-emptive issue at ratio 1:3, what does that mean

A

1 share issued for every 3 held

117
Q

What document is sent on impact day for placing

A

Placing letter

118
Q

Provision restricting placing discount to 10%

A

LR 9.5.10R

119
Q

What does ‘impact day’ mean?

A

Date listing announced to the market

120
Q

Why is there a step to take before impact day in placing

A

Need to find price + number of investors interested - unlike for pre-emptive where it is to existing Ms

121
Q

If no GM is required, when is Admission + credit CREST after Impact Day

A

Day after

122
Q

When must prospectus be sent out if required

A

On Impact Day

123
Q

What kind of discount would be called deeply discounted for rights issue

A

60%

124
Q

What does PEG only apply to

A

Disapplication of pre-emption rights

CF (11 decks)

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