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FCA > Prospectus > Flashcards

Prospectus Flashcards

1
Q

When is a prospectus required?

A

1) Required for all public offers for securities in the UK

2) Admission of the transferable securities on a regulated market in the UK

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2
Q

What are the exemptions for a prospectus?

A

1) Small issues (<8m EUR within UK over 12 months)
2) Qualified investors or to <150 investors per EU state
3) Bonus or scrip issues

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3
Q

When is a prospectus required for admission or AIM or NEX?

A

Required if it is a public offer (>8m EUR or >150 non-qualified investors)

Admission document is required instead

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4
Q

What are the roles in preparation of a prospectus?

A

Sponsor coordinates, directors are responsible

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5
Q

How much time needed for UKLA to grant approval before circulation of prospectus?

A

10 business days

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6
Q

What are the 3 parts to a prospectus?

A
  1. Registration doc
  2. Securities doc
  3. Summary doc
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7
Q

What are the main sourcebooks used by the UKLA for equity capital markets?

A
  1. Listing Rules
  2. Disclosure and transparency rules
  3. Prospectus Rules
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8
Q

What is the role of FCA in ECM? (4)

A
  1. Maintain official list whose securities are traded
  2. Approve prospectus
  3. Admit companies to official list
  4. Regulate listed companies
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9
Q

What are the six listing principles on the Listing Rules?

A
  1. Directors understand responsibilities and obligations
  2. Establish adequate procedures, systems and controls
  3. Act with integrity
  4. Communicate information to avoid false markets
  5. Shareholders treated equally
  6. Open and cooperative with FCA
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10
Q

What is a regulated market?

A

Multilateral system operated and managed by a market operator which brings together to facilitate multiple third party buying and selling interests in financial instruments

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11
Q

What is an MTF?

A

Brings together multiple parties that are interested in buying or selling financial instruments, can be operated by investment firm or market operator

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12
Q

What are the admission criteria for High Growth Segment market? (4)

A

1) Produce a prospectus approved by an EEA
2) Appointment of a key advisor, retained for admission and notifiable transactions
3) Historic revenue growth of 20% CAGR over three years
4) Min free float of 10% with value of >£30m

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13
Q

What is the Specialist Fund Segment (SFS)?

A

Designed for closed-ended listed funds aimed at institutional and high net worth investors

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14
Q

What are listing requirements for Official List? (9)

A

1) Public company
2) Freely transferable and fully paid
3) 3 years trading record (premium only)
4) Market capitalisation: £700,000 equity / £200,000 debt
5) 25% to public
6) Appointment of sponsor (premium only)
7) Prospectus approved
8) Pre-emption rights (premium only)
9) Continuing obligations

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15
Q

How many years record for insider lists?

A

5 years

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16
Q

What is the function of Disclosure and Transparency Rules (DTR)?

A

Limit the incidence of inside information being disseminated unequally or illegally and comply with MAR

17
Q

What is the sponsor’s role in a listing? (4)

A

1) Guides company in understanding obligations
2) Deals with FCA
3) Performs disclosure functions
4) Identify and create systems to manage potential conflicts

18
Q

What is the difference between offer for sale and offer for subscription?

A

Offer for subscription is a direct listing

Offer for sale undertakes agreements with underwriters to acquire unsold shares for full price

19
Q

What is a placing?

A

Quickest and cheapest way for company to raise new funds from existing investor client base through investment bank

20
Q

What is an introduction?

A

Does not involve issue of new shares - shares held are admitted to listing (overseas listing seeking to secondary list in UK or AIM company moving to main market)

21
Q

What is a rights issue?

A

Company offers existing shareholders to buy further shares in accordance with pre-emption rights

22
Q

What is an open offer?

A

Pre-emptive offer to existing shareholders, does not give shareholders right to sell their entitlement to new shares

23
Q

What is a vendor consideration placing?

A

Way of raising small sum of money to finance an acquisition

24
Q

When is disclosure of acquisition or disposal of shares required for UK companies?

A

If listed and incorporated in the UK, disclosure is needed if % reaches, exceeds or falls below 3% and each 1% thereafter up to 100%

25
Q

What are the exclusions for disclosure of share holdings?

A

1) Shares held by custodian
2) Market maker (10% threshold)
3) Fund manager (5%)
4) Shares held for trading (5%)
5) Shares held as collateral
6) Shares borrowed

26
Q

What are Class 2 transactions and its procedures?

A

Class 2: Any % ratio is 5%-25%

Full disclosure need to be made

27
Q

When are disclosures of changes in major holdings required?

A

As soon as possible to FCA, no later than 2 trading days

28
Q

What are Class 1 transactions and its procedures?

A

Any % ratio 25% or more requires:

1) Sponsor appointed
2) Shareholder circular
3) Shareholder approval

29
Q

What are % ratios based on (4 Class tests)

A
  1. Gross assets test
  2. Profits test
  3. Consideration test
  4. Gross capital test
30
Q

What are the listing requirements for AIM market?

A
  1. Public company
  2. No trading record needed
  3. No min market cap
  4. No share ownership requirement
31
Q

When doe the pre-admission document need to be provided to LSE for AIM listing?

A

At least 10 business days

32
Q

When does an admission document or prospectus need to be submitted to LSE for AIM listing?

A

At least 3 business days

33
Q

What are the duties of nominated advisors?

A

Advise directors of responsibilities of an AIM listed company

34
Q

What is the role of a broker in an AIM listing?

A

Ongoing responsibility to support the trading of company’s shares

FCA (6 decks)

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