Module 9 Flashcards
Reasons for listing (2)
- Free trading of shares
- Raise future finance
Alternative Investment Market AIM
LSE’s market for smaller, growing companies
AIM offers similar benefits to full listing without full burden of Main Market eg (3)
- Companies do not need three-year track record
- No requirement for 25% of shares to be in hands of general public
- AIM has more flexible regulatory regime
AIM is seen as
Stepping stone to full listing on the main market
Main Market Abuse Regulation (MAR) requirements (4)
- Additional rules around the disclosure of inside information
- Extensive record keeping requirements
- Maintenance of insider lists
- Introduction of ‘closed period’ prior to financial statements issue during which directors cannot deal in shares
Standard listing only subject to
Minimum European requirements
Companies required to make clear whether
Premium or standard listing on Regulatory Information Services (RIS) announcements
Premium vs Standard listing > Able to appoint sponsor
Premium: Yes
Standard: No
Premium vs Standard listing > Applicable indices
Premium: FTSE UK series where eligible
Standard: None
Premium vs Standard listing > Audited historical financial information
Premium: Three years
Standard: Three years or as long as issuer has been in operation
Premium vs Standard listing > Three year trading record and control over majority of assets over three year period
Premium: Yes
Standard: No
Premium vs Standard listing > Corporate governance requirements
Premium: UK Corporate Governance Code
Standard: Corporate Governance statements
Premium vs Standard listing > Share dealing rules
Premium: Market Abuse Regulation
Standard: None
Premium vs Standard listing > Rules on significant transactions
Premium: Yes - class test Standard: No
Premium vs Standard listing > Related party transactions
Premium: Yes
Standard: No
Premium vs Standard listing > Shareholder approval required for transfer between listing categories/ cancellation of listing
Premium: Yes - 75% shareholder approval
Standard: No
Concerns of standard listing option (2)
- Insufficient liquidity in the market for shares in companies with standard listings
- Lower corporate governance requirements > more open to abuse
Types of companies who use standard listings (4)
- UK incorporated acquisition vehicles
- Companies that have moved from other markets
- Companies that have stepped down from premium listing
- Smaller, cost sensitive companies
To be able to list shares on the Main Market of the LSE, company must satisfy (2)
- FCA Listing Rules - Admission to listing
- London Stock Exchange rules - Admission to trading
The Listing Rules are split into three
- The Listing Rules
- The Prospectus Rules
- The Disclosure Rules
The Listing Rules contain
The eligibility criteria for listing, the duties of sponsors and continuing obligations of listed companies.
Sponsor
Approved by the FCA, sponsor provides assistance and assurance in the process of listing a security
Sponsor needed when (4)
- Company seeks an initial premium listing on the Main Market
- Premium listed company issues more shares
- Class 1 or reverse takeover transaction takes place
- Company enters into related party transaction
Qualifications of the sponsor (3)
- Must be on the FCA’s qualified list
- Satisfy the FCA they are competent
- Be independent of the company