Preparation for Listing

Question 1

Give 3 advantages to listing on Main Market/AIM

Answer 1

• Greater access to capital to fund growth/reduce debt
• Provides market for shares
• Public profile

Question 2

Give 3 advantages to listing on Main Market rather than on AIM

Answer 2

• Prestige
• Easier to attract institutional investors (safer investment)
• Only reqs sponsor at specific times (AIM reqs NOMAD and NOBAD)
• initial share price may be higher because more demand

Question 3

Give 3 advantages to listing on AIM rather than on Main Market

Answer 3

• less regulation than LSE
• AIM rules are less onerous than LPDT rules
• Easier to be exempt from prospectus reqs
• no min. market capitalisation req
• no stamp duty

Question 4

Give 3 disadvantages to listing on Main Market/AIM

Answer 4

• formal reporting and disclosure reqs
• continuing obligations
• loss of control (additional influences)
• lots of time req
• greater exposure to commercial/market conditions and fluctuations
• expensive to float - all the fees
• Ds risk being sued personally

Question 5

How does a private company list?

Answer 5

Pvt company cannot offer shares to public (s.755), so needs to re-register as plc (s.90 CA)
- needs SR

Question 6

Do companies have to comply with UK CGC?

Answer 6

Not compulsory, but institutional investors are more likely to invest in a company that follows good corporate gov principles and complies with CGC

Question 7

what is the ‘comply or explain’ principle

Answer 7

LR 9.8.6R(6) reqs a listed company to state how it has complied or not complied with all the relevant CGC provisions, giving reasons for non-compliance