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LPC Law Notes Corporate Finance Notes

Secondary Issues 2 Notes

Updated Secondary Issues 2 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 u...

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: 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

- EoD – Event of Default

AUTHORITY TO ALLOT SHARES

- 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.

- s.570(3) – General disapplication of pre-emption rights ceases when the authorisation to allot shares to which it relates is revoked/expires BUT can be renewed by another special resolution for the same period as the authority to which it relates is renewed by a s.551(4) Companies Act 2006 ordinary resolution.

- Companies Act 2006 s.571: Specific Disapplication of Pre-Emption Rights – Where directors of company have been GENERALLY/SPECIFICALLY AUTHORISED to allot shares by way of a s.551 Companies Act 2006 ordinary resolution, a special resolution of the company may be used to resolve that s.561 Companies Act 2006 pre-emption rights do NOT apply to a SPECIFIED ALLOTMENT of equity securities made pursuant to that authorisation.

- s.571(3) – Specific disapplication or statutory pre-emption rights ceases to have effect when the authorisation to which it relates is revoked/expires BUT if the authorisation is renewed by a s.551(4) Companies Act 2006 ordinary resolution then the specific disapplication of statutory pre-emption rights can be renewed by a further special resolution for a period not longer than that for which the authorisation to allot shares has been renewed.

- PEG Statement of Principles: Part 2A(2): Disapplication of Pre-Emption Rights – Special resolutions proposing the general disapplication of s.561 Companies Act 2006 pre-emption rights likely to be supported by shareholders where they satisfy the SIZE + DURATION CRITERIA.

- PEG Statement of Principles: Part 2A(3): Size Criteria – Company may seek authority by special resolution to make a NON-PRE-EMPTIVE CASH OFFER of equity securities (i.e. offer to which pre-emption rights disapplied) representing:

(a) no more than 5% of the issued ordinary share capital...

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