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Secondary Issues 2 Notes

LPC Law Notes > Corporate Finance Notes

This is an extract of our Secondary Issues 2 document, which we sell as part of our Corporate Finance Notes collection written by the top tier of Cambridge And Oxilp And College Of Law students.

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Corporate Finance: SGS 6: Secondary Issues (II) 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
- Companies Act 2006 s.551(1): Authority to Allot Shares - Directors of a company may exercise a power of the company to allot shares in the company if they are authorised to do so by the company's articles OR by an ordinary resolution.
- s.551(2) - Authorisation can be general/specific and conditional/unconditional.
- s.551(3) - Authorisation must state maximum number of shares which can be allotted under it and the duration of the authorisation, which must be no more than 5 years.
- s.551(4)/(5) - Authorisation can be renewed/revoked/varied by an ordinary resolution + ordinary resolution renewing the authorisation must state the maximum number of shares which can be allotted under the renewed authorisation and the duration of that authorisation, which must be no more than 5 years.
- s.551(8) - Ordinary resolution can be used to grant/amend/revoke/renew authority to allot shares even if this amends the company's articles, despite amendments to articles usually requiring a special resolution under s.21(1) Companies Act 2006.
- s.551(9) - Ordinary resolution under s.551 Companies Act 2006 treated as a resolution affecting the company's constitution under s.29(1)(e) Companies Act 2006 - copy of s.551 ordinary resolution must be sent to Registrar within 15 days of the resolution being passed under s.30(1) Companies Act 2006.
- Share Capital Management Guidelines: Directors' Power to Allot Shares - IMA members will regard as routine a s.551 Companies Act 2006 ordinary resolution granting company directors authority to allot up to 2/3 of the existing issued share capital BUT any amount in excess of 1/3 of existing issued share capital should be applied to FULLY PRE-EMPTIVE RIGHTS ISSUES ONLY.
- Authority granted by way of a s.551 Companies Act 2006 ordinary resolution should last until the next AGM.
- Based on fact that appropriate protections against dilution of shareholdings provided by pre-emption rights +
requirement that shareholders of premium listed companies in UK approve major transactions (LR 10 + Class 1 Transactions Rules). PRE-EMPTION RIGHTS AND DISAPPLICATION OF PRE-EMPTION RIGHTS
- Companies Act 2006 s.560(1): 'Equity Securities' - Ordinary shares in a company (i.e. shares other than shares which, as regards dividends and capital, carry a right to participate in a distribution only up to a specified amount).
- Companies Act 2006 s.561(1): Pre-Emption Rights - Company must NOT allot 'equity securities' to a person on any terms UNLESS: (a) company has made an offer to each existing holder of ordinary shares in the company to allot to him on same/more favourable terms, a proportion of the 'equity securities' being issued which is as nearly as practicable equal to the proportion of the nominal value of the company's existing issued share capital held by that member; AND (b) the period during which such an offer may be accepted has expired or the company has received notice of the acceptance/refusal of all such offers.
- Companies Act 2006 s.570(1): General Disapplication of Pre-Emption Rights - Where directors of company have been GENERALLY AUTHORISED to allot shares in the company by way of a s.551 Companies Act 2006 ordinary resolution, a special resolution of the company can be used to disapply s.561 Companies Act 2006 pre-emption rights in respect of shares issued pursuant to that authorisation. 1

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