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LPC Law Notes Corporate Finance Notes

Corporate Finance Revision Summary Notes

Updated Corporate Finance Revision Summary Notes

Corporate Finance Notes

Corporate Finance

Approximately 155 pages

A collection of the best LPC Corporate Finance notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through dozens of LPC samples from outstanding students with the highest results in England and carefully evaluating each on accuracy, formatting, logical structure, spelling/grammar, conciseness and "wow-factor".
In short these are what we believe to be the strongest set of Corporate Finance notes available in the UK this year. This collection of notes is fully...

The following is a more accessible plain text extract of the PDF sample above, taken from our Corporate Finance Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

Corporate Finance: Revision Summary

INDEX OF ABBREVIATIONS

- RIE – Recognised Investment Exchange

- IPO – Initial Public Offering

- PR – Prospectus Rules

- LR – Listing Rules

- DTR – Disclosure Guidance and Transparency Rules

- LP – Listing Principles

- PLP – Premium Listing Principles

- FSMA 2000 – Financial Services and Markets Act 2000

- RAO – Financial Services and Markets Act 2000 Regulated Activities Order 2001

- FPO – Financial Services and Markets Act 2000 Financial Promotions Order 2005

- MAR – Market Abuse Regulations

- CJA – Criminal Justice Act 2002

- FSA – Financial Services Act 2012

- UK CGC – UK Corporate Governance Code

- RCF – Revolving Credit Facility

- LSE – London Stock Exchange

- AIM – Alternative Investment Market

- FCA – Financial Conduct Authority

- MAC - Material Adverse Change

- EoD – Event of Default

CORPORATE FINANCE: KEY TERMS AND CONCEPTS

- Recognised Investment Exchange (RIE) – Investment exchange recognised by the FCA + exempt from general prohibition in respect of regulated activities in s.19(1) FSMA 2000 – includes LSE Main Market and AIM.

- Regulated Market – Defined in FCA Handbook – includes Main Market of LSE but NOT AIM.

- Prescribed Market – Defined in FSMA Regulations + includes LSE Main Market and AIM.

- Quoted Company – Company whose equity securities are listed on the Official List.

- Traded Company – Company, any shares of which carry rights to vote at general meetings and are admitted to trading on a regulated market in an EEA Member State.

- Primary Issue – First time that company makes offer of listed shares – also known as a ‘flotation’ or ‘initial public offering’ (IPO).

- Secondary Issue – Subsequent issue of shares by a listed company.

- Companies Act 2006 s.755: Prohibition of Public Offers by Private Companies – Private companies prohibited from offering shares to the public.

- s.756: Public Offer – Includes offers not intended to be limited solely to persons to whom the offer was directly communicated.

- Public Companies – Generally larger companies capable of offering shares to public – private company can re-register as a public company by following the procedure in s.90 Companies Act 2006.

- Listed Company – 3rd stage in development of a company where company’s shares are listed on the Official List and admitted to trading on the Main Market of the LSE.

- Central Securities Depository (CSD) Regulation 2014 – Governs ‘central securities depositories’ in the EU – aimed to harmonise the timing/conduct of securities transactions + requires all dealings in listed shares to be settled electronically.

- ‘Central Securities Depositories’ – Institution which holds financial instruments and facilitates electronic transfer of financial instruments.

- CREST – Computerised system which allows shares to be held/traded electronically between CREST members by issue of instructions to CREST regarding the price/number of shares being transferred BUT only UK listed companies or companies established in other jurisdictions which have adopted the CREST system can be traded using CREST – 4 ways in which investors may operate CREST accounts:

(a) Direct Users – Have direct connection to CREST – usually banks/stockbrokers who settle trades on CREST on daily basis.

(b) Sponsored Members – No direct connection to CREST but appoint a direct user to communicate with CREST on their behalf.

(c) Shares Held Through Nominee – Shareholder appoints a direct user to act as their nominee and hold shares on behalf of the shareholder in a nominee account – nominee’s name appears on company’s register of members and holds legal title to the shares BUT agrees to forward all communications/dividends/other payments received from company to shareholder.

(d) Non-CREST Members – Shareholders who are NOT CREST members wishing to transfer shares into CREST to sell them in course of a flotation must use a CREST Transfer Form.

ANALYSIS OF LISTING SECURITIES

(1) Advantages of Listing a Company’s Shares

(a) Access to Capital – Flotation allows for injection of cash/capital into company to fund expansion or reduce existing debts to improve gearing ratio – new shareholders also act as potential source of additional funding in the future.

(b) Providing a Market – No market for trading in shares in unquoted companies BUT by obtaining admission of shares to the Main Market/AIM company allows shareholders to buy/sell shares on a public market + makes it easier for company to conduct secondary share issues.

- Flotation allows existing shareholders to sell shares or invest in further shares + enables them to buy/sell shares in the company thereafter due to existing market in the company’s shares.

(c) Public Profile – Publicity generated by a flotation will usually benefit the business of the company.

(d) Investor Confidence – Listed companies must keep investors unformed of its financial performance – allows for closer monitoring of company by investors and ensures that financially successful companies acquire the confidence of their investors.

(2) Disadvantages of Listing a Company’s Shares

(a) Disclosure/Reporting Requirements – Companies on Official List must comply with large number of regulatory requirements (e.g. LPDT Rules + Market Abuse Regulation 2014 + LSE Admission and Disclosure Standards + Disclosure Guidelines and Transparency Rules + Prospectus Rules/PD Regulation) + non-compliance can lead to penalties/censure/suspension of trading/cancellation of listing.

(b) Management Time – Listing on Main Market or admission to AIM can be complex/time-consuming process – requires company directors to devote substantial amount of time/resources to the flotation process at same time as continuing to operate the business of the company.

(c) Changes to Board – Potential investors will want to ensure that investors have appropriate experience/expertise and may demand changes to the board.

- Listed companies must comply with requirements of Corporate Governance Code regarding...

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