5. Conditions to be Admitted to the Official List

Question 1

Conditions relating to the applicant

Answer 1

• Must have published or filed historical financial information which covers at least three years

The applicant must have a latest balance sheet date of no more than six months before the date of the prospectus and no more than nine months before the date of admission to listing.
Note, where the applicant has subsidiary undertakings, the historical financial information must include consolidated accounts
N.B. if the accounts are not suitable for these purposes, new accounts will need to be prepared – it is likely that the company will choose to have its interim accounts audited for the purposes of the flotation

the historical financial information must represent at least 75% of the applicant’s business and put prospective investors in a position to make an informed assessment of the applicant’s business

Will need to satisfy FCA that the group has sufficient working capital for its requirements for at least the next 12 months from the date of the prospectus

Question 2

Conditions relating to shareholders

Answer 2

25% of shares must be “in public hands” in one or more EEA states no later than the time of admission (the “free float” requirement): LR 6.14.1R - 6.14.3R

EXAM TIP: Remember to
look at the right hand column when examining a table to see where the shares will be at the point of admission

Sets out which shares are not regarded as being held in ‘public hands’, includes:

• Directors of the company
• Connected persons - Who are not defined!
• Any shareholder with over 5% interest
• Trustees of pension scheme or an employee within the pension scheme.

FCA may approve admission with less than 25% in public hands if deemed acceptable (uncommon)

Question 3

Conditions relating to Shares

Answer 3

LR 2.2.3R - the shares must be admitted to trading on a regulated market
LR 2.2.9R – to be admitted on the official list, the whole class of the shares must be listed

the market capitalisation of all the shares to be listed must be at least £700,000
the shares must be freely transferable and compatible with CREST (amend articles, by SR)
the shares must be duly authorised (in accordance with the company’s constitution

Question 4

What about company’s articles for share reqs?

Answer 4

N.B. due to the requirements on the shares, articles in the form of Model Articles for private cos are not appropriate for listed plcs.
E.g. the obligation set out in LR 2.2.4R for listed shares to be freely transferable will require any transfer restrictions to be removed from the articles and from any related shareholders’ agreement. – so need SR under s. 21
In practice, the existing shareholders’ agreement is most unlikely to be acceptable to incoming shareholders in all respects and should be terminated as part of preparation for listing.