6) Secondary Share Issues 2

Question 1

What is the rule for when prospectus has to be submitted by?

Answer 1

• PR 3.1.3R(2)(a)
• 10 clear working days
• Likely to be submitted before this

Question 2

What needs to be done BEFORE impact day for a rights issue?

Answer 2

• Signing the underwriting agreement + terms are agreed

- Kept in escrow to be dated on impact day

Question 3

List the 5 things that need to be done on impact day during a rights issue?

Answer 3

1. Date the underwriting agreement
2. Notification of RIS - 9.5.5R
3. Send circular to shareholders + post prospectus on website
4. Send out PALs
5. Admission of shares to official list (nil paid)

Question 4

Rights issue offer has to stay open for 10 business days. On what date does this start?

Answer 4

• Day 1 = date that the nil paid rights are admitted to listing and trading
• And the CREST accounts credited.

Question 5

What needs to be done in a rights issue the day AFTER impact day?

Answer 5

• CREST accounts are credited

Question 6

In a rights issue what happens ON the AD (last date for acceptances) date?

Answer 6

• The fractional entitlements and shares are sold on behalf of the overseas shareholders
• By this date

Question 7

What happens on the SECOND dealing day after the AD (last date for acceptances?)

Answer 7

• Sale of the rump by the broker.

Question 8

What should happen on the FIFTH day after AD (last date for acceptances?)

Answer 8

• Purchase of the stick by underwriters

Question 9

When would a GM have to be convened

Answer 9

• When going ahead with a placing
• SR would be needed to DISAPPLY pre emption rights
• Especially if current disapplication obtained would be exceeded!
• Need to give standard days notice - s307A is for trading companies

Question 10

why might you have to delete anything to do with a GM from a rights issue timetable?

Answer 10

• Might not require a GM
• If do not need to disapply PE rights
• No GM needed to grant authority to allot shares

Question 11

why could we delete the requirement for a Gazette meeting in a rights issue timetable?

Answer 11

• if there ARE PE rights.
• Can exclude the possibility of having a gazette meeting / notice
• This is if you DO have an authority to allot.
• But DO NOT have pre emption rights, which is a fairly rare occurrence.

Question 12

When would you usually need a Gazette meeting in a rights issue timetable?

Answer 12

• When there IS an authority to allot but there are no pre-emption rights.
• If there ARE already pre emption rights, then there is no need for a gazette meeting.

Question 13

What are the changes that could be made with impact day, the things that should be happening on this date?

Answer 13

• The prospectus should be sent out to shareholders on impact day - PR 3.1.10
• PALS should be sent out on impact day also
• So if these dates are not the same in a rights issue timetable, amend so that it reflects they are all on the same date.

Question 14

What are the requirements for when there is notification to RIS?

Answer 14

• This should be made on impact day (ASAP)

LR 9.5.5R

Question 15

When should the CREST accounts be credited in a rights issue timetable?

Answer 15

• The day after impact day

- They are credited with nil paid rights on the next trading day after impact day

Question 16

What is the correct last date for acceptances in a rights issue timetable?

Answer 16

• Offer must stay open for 10 full BUSINESS days
• Under LR 9.5.6
• Should close on 11th business day from the day that the CREST accounts are credited.

Question 17

When counting the 11th business day after nil paid rights are admitted for the purposes of LR 9.5.6R, what is day 1?

Answer 17

• Need to count day 1 as the date of admission of shares nil paid to the Official List

Question 18

Why can PALs only be sent out to shareholders and shareholders’ CREST accounts credited AFTER shareholders’ approval to the share issue has been obtained at the GM?

Answer 18

• Trading in the nil paid rights must only take place during unconditional offer period once shareholders’ approval is received,
• in order to avoid any completed deals relating to the nil paid rights having to be undone.

Question 19

state verbatim what the share capital management guidelines / PEG rules say about the usual rules for secondary issues of shares?

Answer 19

• usually directors have authority to allot the equivalent to a third of existing share capital in relation to any issue
• but the PEG rules will apply for a placing as it is a non pre-emptive issue: which recommends no more than 5% for anything then additional 5% (so total 10%) if in connection with a specified transaction - state what the transaction is