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IMC Unit 1 > Chapter 6 > Flashcards

Chapter 6 Flashcards

1
Q

what is floatation

A

a listing and an IPO

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2
Q

what is on IPO

A

initial public offering
the first sale of stock to the general public

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3
Q

what is an introduction

A

holding a listing without an IPO

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4
Q

what is a cross listing

A

when a company seeks to trade on two or more seperate stock markets

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5
Q

what is a dual listing

A

when 2 corporations function as a single operating business through a legal equalization agreement but retain separate legal identifies and stock exchange listings

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6
Q

what is the advantage of floatation

A

acquisition and merger
public profile and prestige

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7
Q

what are the disadvantages of floatation

A

regulation and cost
market conditions
investor powers

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8
Q

what is the UKLA

A

the name given to the FCA when it is overseeing stock exchange traded PLC’s

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9
Q

what is a propsectus

A

a publication containing all the relevant information required for a potential investor to make an informed decision about buying a companies securities and the rights attached to those securities

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10
Q

when must listed particulars also be included

A

when a company’s shares are going to be introduced into a stock exchange

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11
Q

what are listed particulars

A

an application form that the company would use to get its stock traded onto a particular market or exchange

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12
Q

when are prospectuses not required

A
  • to qualified investors
  • to fewer than 150 natural persons
  • for offers less than 5 mill euros over 12 months
  • where investors acquire at least 100k euros each
  • non transferable securities
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13
Q

who do the disclosure and transparency rules

A

applies to shares traded on a regulated market in the UK to help prevent insider dealing and market

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14
Q

when a company has shares on the LSE what regulations are they bound by

A
  • the companies act
  • FCA and UKLA rules
  • LSE rules
  • Firms providing services relating to advice, arranging deals etc
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15
Q

what are the 2 listings that companies can aim to get on the LSE

A

premium listed
standard listed

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16
Q

when can a company become a standard listing

A

when they meet the EU requirements

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17
Q

what is the AIM market considered to be

A

an MTF

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18
Q

who is the AIM for

A

start ups / small companies

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19
Q

who is the main competitor to the LSE

A

AQSE

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20
Q

where to applications for being listed of the official LIST go to

A

the UKLA, then if the UKLA deems the company is suitable the company can take the application to the LSE

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21
Q

what are the listing rules for a premium listing

A

-public company
- trading history of 3 years w/ corresponding audited financial statements
- 12 months working capital
- market value of at least £30 mill and debt at least £200,000
- management with sufficient experience and expertise
- sponsors
- share ownership of at least 10% in public hands

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22
Q

what are the listing rules for a standard listing

A

-public company
- market value of at least £30 mill and debt at least £200,000
- management with sufficient experience and expertise
- share ownership of at least 25% in public hands

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23
Q

where do the applications for the AIM market go

A

direct to the LSE

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24
Q

what key roles must companies who apply to AIM have

A

NOMAD - advise directors of responsibilities
Broker - someone who acts as a market maker on an LSE platform

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25
Q

AIM conditions for entry

A
  • public company
  • accounts must be IAS complaint
  • admissions document
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26
Q

what is there not for AIM conditions for entry

A
  • min free float
  • min trading record
  • shareholder approval
  • min market capitalization
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27
Q

where must announcements be made by listed companies

A

the regulatory information service

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28
Q

what must a listed company do in regards to disclosure and transparency rules

A
  • disclosure and control of inside information ; if a director deals in his own companies shares then that should be public knowledge
  • periodic financial reporting ; annual and half yearly reports
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29
Q

when must fully audited reports be available for a listed company

A

4 months after the end of the financial year at the latest

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30
Q

what is in the published directors report

A
  • a description of the control and risk management systems
  • desc of the admin, management and supervisory bodies and committees
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31
Q

what is the point of the published directors report

A

it stresses the importance of companies to apportion responsibilities within the company among the directors to make sure that the responsibilities are being fulfilled

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32
Q

what are the main principles of the UK code of conduct

A
  • board, leadership and purpose
  • division of responsibilities
  • composition, succession and evaluation
  • audit, risk and control
  • remuneration
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33
Q

what is the stewardship code

A

it is the code made in addition to the stewardship code
it is a set of principles aimed at asset managers and asset owners

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34
Q

what are resolutions

A

where shareholders can vote on different decisions

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35
Q

what are the 2 different types of shareholder meetings

A

AGM
general meetings

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36
Q

who can call meetings

A

the board of directors

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37
Q

who can call general meetings

A

by the board
or by shareholders who 5% or more of the voting shares in the business

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38
Q

what is the notice of an AGM meeting

A

21 days

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39
Q

what is the notice of a general meetings

A

14 days

40
Q

after what period of time is an electronic communication deemed to be sent

A

48 hours

41
Q

what % of votes are needed to pass an ordinary resolutions

A

50%

42
Q

what % of votes are needed to pass a special resolution

A

75%

43
Q

what is an example of an ordinary resolution

A

approval of annual financial statements

44
Q

what is an example of a special resolution

A

changing company name

45
Q

when must a proxy form be deposited by

A

48 hours before the meeting

46
Q

what is a special proxy

A

used when a shareholder knows what they are going to vote before a meeting

47
Q

what is general proxy

A

appointed by a shareholder who doesn’t know what way they will vote

48
Q

what % makes someone a notifiable interest

A

when they own 3% of shares

49
Q

how long does someone have to disclose their notifiable interest

A

2 business days

50
Q

when does someone need to disclose a notifiable interest to the company

A

when their shares reach 3%
when they go below 3%
any full % point above 3%

51
Q

what is a connert party

A

any group of individuals who have agreed to vote together

52
Q

what is a connected party

A

people who can influence each other on their decisions
i.e. spouses or a director and their company

53
Q

what are the EU transparency directive thresholds

A

5% 10% 15% 20% 25% 30% 50% 75%

54
Q

how long do you have disclose notifiable interest under EU transparency rules

A

4 business days

55
Q

what is a takeover

A

when a company wants to take over another company

56
Q

what is a merger

A

when 2 companies want to join forces to create 1 entity

57
Q

who is the CMA

A

the government entity that looks into takeovers and mergers

58
Q

CMA relationship to the FCA

A

they are completely separate entities

59
Q

what is phase 1 of a merger

A

the qualifying merger

60
Q

what is the qualifying merger

A

the first step that the CMA takes to determine whether they can approve of a merger / acquisition or not

61
Q

what tests are undertaken by the qualifying merger

A

shares of supply test - combined entity accounts for 25% of supply on an acquisition
turnover test - is the turnover of the target bid larger than £70m / turnover of entity acquired exceeds £70m
if yes to either of the q’s go onto phase 2

62
Q

how long does the CMA have to complete the qualifying merger

A

40 days

63
Q

when is phase 2 of a merger used

A

when the merger is classified as qualified by phase 1

64
Q

at what stage of the merger process are the takeover code and panel considered

A

when phase 1 or phase 1/phase 2 are complete
i.e. the go ahead has been given by the CMA

65
Q

who is the takeover panel

A

another regulator who is responsible for writing and monitoring compliance of the takeover code

66
Q

how is the takeover panel funded

A

by the takeover panel levy
£1 fee on transactions on the LSE larger than £10,000

67
Q

what are the general principles of the takeover code

A
  • to protect shareholders in both target and predator companies
  • to ensure that all shareholders must be treated equally during the takeover and are protected after takeover
  • shareholders must be given sufficient time and info to reach a decision on the bid
68
Q

when does a compulsory bid arise

A

when the predator company acquires shares of 30% of the voting rights in the target company

69
Q

at what price must be offered for shares under a compulsory bid

A

the highest bid paid in the last 12 months

70
Q

how long must share offers be open for under a compulsory bid

A

21 days

71
Q

unconditional bid occurs when

A

when a predator gains more than 50% of the target company

72
Q

when can a squeeze out occur

A

90%

73
Q

what happens under a squeeze out

A

the shareholders can squeeze out the remaining shareholders that are saying no to get 100% of the business

74
Q

what are used to resolve the potential conflict of interest that arises in the principal agent problem

A

UK code of corporate governance - limits the way in which agents of companies act in their positions
stewardship code - shareholder activism, makes shareholders thing of other things bar maximizing returns

75
Q

under the companies act what force do the takeover code have

A

statutory

76
Q

if a company has price sensitive info to disclose - who do they give this to

A

the primary information provider

77
Q

when is a proxy valid

A

on the day of the meeting and at any adjournment

78
Q

when a company breaches the takeover code what can the takeover paneldo

A

issue a public censure

79
Q

in a dual listing do both legal entities have the same share price?

A

no they can have different ones

80
Q

what is the main role of a NOMAD

A

to advise the directors of its obligations to comply with the AIM rules
includes providing advice on exchange rules

81
Q

what does the equalization agreement ensure

A

that all shareholders have the same power

82
Q

who approves of a prospectus

A

the FCA

83
Q

is a concert of 4 investors have 1% each what % of investment are they deemed to have

A

4% each

84
Q

for AIM companies what must they not need

A

min free float
min trading record
shareholder approval
min market cap

85
Q

the UK code of corporate governance recommends that the composition of the board of directors should be evaluated how often

A

annualy

86
Q

what type of listings are included in the FTSE

A

premium listings

87
Q

who other than the CMA has the power to stop a merger

A

the department for business, energy and industrial strategy

88
Q

who decides admission to the LSE

A

AIM

89
Q

who regulates prospectuses for the AIM market

A

FCA

90
Q

who is incharge of disclosure and transparency rules for the AIM market

A

FCA

91
Q

who do the disclosure and transparency rules apply to

A

Main market and AIM

92
Q

what are examples of RIS

A

Regulatory News Service
Business wire
PR newswire disclose

93
Q

what act requires annual financial reports to be published

A

the Companies Act 2006

94
Q

what act requires annual meetings

A

the Companies Act 2006

95
Q

when must a person discharging a material responsibility notify a company of any trade

A

within 3 business days

96
Q

when there is a concern for national security in a takeover / merger who can intervene and take control

A

the Secretary of State for Business, Energy and Industrial strategy

IMC Unit 1 (11 decks)

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