Terminology

Question 1

Admitted to Listing

Answer 1

Application to FCA for admission to listing on the official list

Question 2

Admitted to Trading

Answer 2

• application to LSE to trading on Main Market of LSE

Question 3

Bookbuilding

Answer 3

Bookbuilding is a way of marketing an issue of shares. It involves the investment bank running a book of interest in the shares from interested investors.

Question 4

Pathfinder

Answer 4

A document called a “pathfinder” may be used by an issuer if they are making an institutional-only offer with no retail element. A “pathfinder” is not a completely separate document, but a near-final draft of the (fixed price) prospectus prepared by the issuer. It will not yet have been approved as a prospectus by the FCA – as it will have gaps where the price and size of the issue should be, it will not be capable of approval in this form. However, it should have cleared all of the comments made by the FCA during its review process. This draft document is used for marketing purposes with institutional investors instead of an approved price-range prospectus. The issuer will then publish an approved Fixed-price prospectus (containing the final agreed price) on the date that the “48-hour documents” are submitted to the FCA

One of the main advantages of a pathfinder is that it reduces the risk of the final price falling outside a published price-range and thereby triggering withdrawal rights for investors (see paragraph 15.3 below). However, only limited distribution of a pathfinder is permitted, as a pathfinder may only be provided to qualified investors (as defined in Art 2(e), Prospectus Regulation). Wider distribution (e.g. to retail investors) could breach the requirements of s.85(1) FSMA and PRR 1.2.1EU/Art. 3(1), Prospectus Regulation, which provide that an approved prospectus will need to be published before an offer of transferable securities is made to the public in the UK (see paragraph 2.4 in Lecture 3)

Distribution is also limited to institutional investors and other sophisticated investors because of the restrictions on the use of financial promotions under s. 21 FSMA