Continuing Obligations Crib Sheet Notes

Continuing Obligations/Disclosure Obligations & Duties

1. Communication of annual financial information to shareholders

   1. DTR 6.1.4R ensures all facilities and information necessary to enable shareholders to exercise their rights are available

   2. DTR 6.1.12R Information shareholders about the time, place and agenda of shareholder meetings, the total number of shares and voting rights, and the rights of shareholders to participate in the meetings

   3. DTR 6.1.13R notice or circular should be sent to shareholders regarding the payment of dividends and the allotment of new shares

   4. LR 9.6.11R a company must announce any change to the board including the role and responsibilities of any director

      1. DTR 2.2.1R announcement can satisfy this requirement

   5. Annual results

      1. LR 9.7A.1R preliminary statement of annual results must be published ASAP after it has been approved by the board

      2. LR 9.7A.2R notify an RIS after the board has approved any decision to pay or make a dividend

   6. Annual financial reports

      1. LR 9.2.6G a listed company should consider its obligations under DTR 4

         1. DTR 4.1.1R & DTR 4.1.3R an issuer whose transferable securities are admitted to trading on a regulated market and whose home Member State is the UK must publish an annual financial report including:

            1. DTR 4.1.7R its audited financial statements

            2. DTR 4.1.8R a management report

            3. DTR 4.1.12R a responsibility statement

         2. DTR 4.1.3R It must publish it no later than 4 months after the end of each financial year

         3. LR 9.8 additional contents of the report

   7. Half yearly reports

      1. DTR 4.2.1R an issuer whose shares are admitted to trading on a regulated market and whose home Member State is the UK should publish a half-yearly report DTR 4.2.2R to be made ASAP but no later than 2 months after the end of the period to which it relates including

         1. DTR 4.2.4R condensed set of financial statements

         2. DTR 4.2.7R an interim management report including an indication of important events that have occurred and their impact on the accounts, and a description of the main risks and uncertainties for the remaining 6 months

         3. DTR 4.2.10R responsibility statements

         4. DTR 4.2.8R a fair review of major related party transactions

   8. CIRCULARS

      1. When are they required?

         1. LR 13.4, 13.5 & 13, Annex 1R Class 1 transactions

         2. LR 13.6 Related party transactions

         3. LR 13.7 Buyback

         4. LR 13.8.1R authority to allot shares

         5. LR 13.8.2R dis-applying pre-emption rights

         6. LR 13.8.4R reduction of capital

         7. LR 13.8.5R capitalisation or bonus issue

         8. LR 13.8.6R Scrip dividend alternative

         9. LR 13.8.4R Mandate schemes or dividend reinvestment plan

         10. LR 13.8.8R Notices of meetings

         11. LR 13.8.10R Amendments to the company’s constitution

         12. LR 13.8.11R Employees share scheme arrangements

         13. LR 13.8.15R Discounted option arrangements

         14. LR 13.8.16R Reminders of conversion Rights

      2. General content requirements

         1. Clear and adequate explanation of subject matter

         2. Statement why the shareholder is being asked to vote, or otherwise why the circular is being sent

         3. If voting or other action is required

         4. All information necessary to allow the shareholder to make a properly informed decision

         5. A heading drawing attention to the importance of the document and advising the shareholder to consult an independent adviser if he is unsure what action to take

         6. If voting is required, a recommendation from the board as to how shareholders should vote, indicating whether the proposal is, in its opinion, in the shareholders’ best interests

         7. LR 13.1.7R FSA can authorise omission of information if it would be against the public interest or seriously detrimental to the listed company

      3. FSA Approval

         1. LR 13.2.2R circulars which do not require prior approval are those which

            1. Are listed in LR 13.8

            2. Comply with LR 13.3 and any requirements of 13.8

            3. Have no unusual features

         2. LR 13.2.1R All other circulars require approval

            1. Company must submit draft circular to FSA at least 10 clear business days before the intended publication date
               

2. Disclosure of Market information

   1. Is the company listed?

      1. LR 9.2.5G a listed company should consider its obligations under the DTRs

         1. DTR 1.1.1 DTR 2 applies to an issuer of financial instruments in the UK which are admitted to trading on a regulated market

            1. ORDINARY SHARES ARE A FINANCIAL INSTRUMENT

         2. DTR 2.2.1R requires a company to notify an RIS as soon as possible of any “inside information” which directly concerns it, unless DTR 2.5.1R applies

            1. The purpose of the rule is to prevent the creation of a false market in the issuer’s securities

   2. Is there inside information?

      1. DTR 2.2.3R refers to the definition of inside information which in Appendix 1 of the Listing Rules says is defined in 118C FSMA

         1. 118C(2) information of a precise nature as defined in 118C(5)

            1. 118C(5)(a) circumstances exists or may reasonably be expected to come into existent or an event has occurred AND

            2. 118C(5)(b) is specific enough to have an effect on the price of qualifying investments

               1. Ordinary shares are qualifying investments

         2. 118C(2)(a) not generally available

            1. 118C(8) information which cannot be obtained by research or analysis

         3. 118C(2)(b) relates directly or indirectly to the issuer of a financial instrument

            1. Section C, Annex 1 MiFID a financial instrument covers ordinary shares

         4. 118C(2)(c) would, if generally available be likely to have a significant effect on the price of the company’s shares

            1. 118C(6) & DTR 2.2.4G(1) information of a kind which a reasonable investor would be likely to use as part of the basis of his investment decisions

            2. The Guidance notes to DTR 2.2.1R suggest that in determining whether or not the information would be likely to have a significant effect on price a “reasonable investor” test should be applied

               1. DTR 2.2.4 – 2.2.6 suggests circumstances

                  1. Although not specifically covered in DTR 2.26G the absence of the most significant executive director would seem to meet this reasonable investor test

            3. FSA Tribunal v Massey There is no need for the information to actually be...

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