#3317 - Eligibility Requirements For Listing Crib Sheet - Public Companies and Equity Finance

Eligibility Requirements/Requirements for Listing

1. Corporate Status

   1. Is the company a private company? (THEREFORE MUST CONVERT)

      1. 75(3) FSMA no application for listing may be entertained in respect of securities issued by a body corporate of a prescribed kind

         1. Reg 3, FMSA (Official Listing of Securities Regulations) 2001 provides that securities of a private company are prescribed for this purpose

      2. 755 CA 2006 prohibits a private company from offering is shares to the public

      3. Re-registration as a public company

         1. 90(1)(a) Special resolution that it should be re-registered

         2. Satisfy conditions by sections 90-93 CA 2006

            1. 90(2)(a) Public company must have share capital

               1. 91(1)(a) allotted share capital must not be less than the authorised minimum

                  1. 763(1) authorised minimum is 50,000 or Euro equivalent

            2. 91(1)(b) allotted shares must be paid up to at least one quarter of the nominal value of the shares and the whole of any premium

            3. 58(1) name must have ‘plc’ or ‘public limited company’ inserted at the end

            4. 21(1) Adopt new articles by Special resolution

2. 75(4) FSMA FSA cannot grant an application for listing unless it is satisfied that the requirements of the Listing Rules have been complied with
   

3. Management & Administration

   1. LR 2.2.1R company must be duly incorporated and operate in conformity with its constitution

      1. 271 CA 2006 appoint a company secretary who is qualified in accordance with 273 CA 2006

      2. 154 CA 2006 have at least 2 directors

4. Constitution

   1. Restrictions on the transferability of shares (pre-emption rights) would not meet the eligibility requirements of the Listing Rules

      1. LR 2.2.4R shares must be freely transferable

   2. Company may need to adopt new articles suitable to its status as a listed company

      1. Special resolution of shareholders – normally adopted immediately prior to admission

   3. Shares must also be fully paid to satisfy LR 2.2.4
      

5. Share Capital

   1. LR 2.2.2 shares must conform with the law of the applicant’s place of incorporation, be duly authorised and have any necessary consents

      1. DOES COMPANY COMPLY?

         1. Company will need to ensure directors have authorisation to issue new shares

            1. In articles or ordinary resolution under 551 CA 2006

         2. Company must also dis-apply 561 CA 2006 pre-emption rights before it issues shares

            1. 570 or 571 in the articles or by special resolution

         3. 763(1) CA minimum share capital of 50,000 of which a quarter must be paid up

   2. LR 2.2.4R shares must be freely transferable

      1. ARE THERE ANY CURRENT RESTRICTIONS?

         1. Pass special resolution under 21 CA 2006 to remove restrictions

   3. LR 6.1.19R a premium listed company must ensure sufficient shares are distributed to the public across the EEA

      1. At least 25% of the company’s shares will need to be in “public hands”

         1. LR 6.1.19(4) public hands does not include directors, anyone connected with a director and any interested in the shares which represent 5% or more of that class of share

            1. LR 6.1.19(4)(e) if group of people owning more than 5% shares then this is not public hands

               1. Shares could be offered to the public by an offer for subscription or to places each taking below 5% or some shareholders could offer for sale some of their existing shares

         2. LR 6.1.20R FSA has discretion with this rule

   4. LR 14.2.2R a standard listed company requires at least 25% of the class of shares to be listed to be in public hands across the EEA
      

6. Listing Rules (Application for admission to listing)

   1. LR 2.2.3R Shares must be admitted to trading on a Recognised Investment Exchange’s market for listed securities

      1. Includes Main Market

   2. LR 2.2.7R minimum aggregate market value of the shares to be listed must be at least 700,000

      1. The FSA has discretion to accept a lower threshold if it is satisfied that there will be an adequate market for the shares

         1. Market capitalisation = number of shares in issue * market price

   3. LR 2.2.9R all shares of the same class must be listed

   4. New Applicants for a Premium listed company

      1. LR 6.1.3R Company must have published or filed independently audited accounts for at least 3 years, ending not more than 6 months before the date of prospectus

         1. FSA has discretion to accept accounts for a lesser period

      2. LR 6.1.4R Company must carry on an independent business as its main activity, and at least 65% of the company’s business must be supported by a 3 years trading record, during which the company must have controlled the majority of its assets

   5. Existing Applicants for a Premium listed company

      1. LR 6.1.16R company and its subsidiaries must have sufficient working capital for the group’s requirements for at least 12 months from the date on which the prospectus is published

   6. LR 6.1.23R all shares listed must be capable of electronic settlement

   7. LR 8.2.1R premium listed company must have a sponsor

7. Admission & Disclosure Standards (application for admission to trading)

   1. 1.1 application for admission to trading of any class of securities must relate to all securities of that class or to all further securities of that class

   2. 1.3 all transferable securities must be freely negotiable

   3. 1.6 issuers must confirm that they meet the criteria and requirements of the market to which they are applying

   4. 1.7 securities must be eligible for electronic settlement

   5. 1.9 all communication must be accurate, complete and not misleading

   6. 1.11 issuer must contact Exchange no later than 10 business days before the application is to be considered

      1. 2.1 submit Form 1 and a draft copy of prospectus to Market Operations team no later than 12pm at least 10 business days prior to the day on which the issuer is requesting the Exchange to consider the application for admission to trading

      2. 2.4 no later than 12pm at least 2 business days prior to day on which issuer wishes ot be admitted to trading, the issuer must submit an electronic copy of the prospectus and written confirmation of the number of securities to be allotted

   7. 1.5 the Exchange may refuse an application if it considers that admission may be detrimental to the orderly operation of the Exchange’s markets or to the integrity of such markets or that the applicant does not or will not comply with the requisite standards
      

8. Corporate Governance

   1. LR 9.8.6(1) Is the company premium-listed?

      1. LR 9.8.6(5) & (6) & DTR 7.2 company will need to follow the doctrine of comply or explain, explaining in its annual report how it has applied the provisions of the UK CGC and whether it has complied with these provisions through the year

         1. PR App 3.1, Annex 1, para 16.4 directors must justify any deviation from the Code in both its Prospectus and any subsequent Annual Report following its floatation

      2. LR 9.8.9 Although UK CGC is...