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LPC Law Notes Public Companies and Equity Finance Notes

Equity Finance Notes

Updated Equity Finance Notes

Public Companies and Equity Finance Notes

Public Companies and Equity Finance

Approximately 165 pages

A collection of the best LPC Equity Finance notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through twenty-nine 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 Equity Finance notes available in the UK this year. This collection of notes is fully upd...

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

Equity Finance

1. Flotations – Preparation for listing

  1. Advantages and disadvantages of listing


  1. Access to capital to fund growth and or reduce debt

  2. Providing a market

  3. Public profile


  1. Burden of disclosure and reporting requirements

  2. Management time

  3. Changes to the board

  4. Cost and fees

  5. Loss of Control

  1. AIM v Market

Advantages of AIM

  1. LR apply only to companies listed on the Official List and do NOT apply to companies on AIM

  2. Besides DTR 5, DTRs DO NOT apply to Aim companies because AIM not a regulated market

  3. AIM companies may find it easier to fall within exemption from requirements to produce full prospectus under the PR. (NB: if no exemption available for s 85(1) FSMA AIM company will still need to produce a full FCA approved prospectus)

  4. AIM rules less onerous than LPDT Rules

Advantages of Main Market

  1. More money, more investors interested

  2. Prestige, greater profile, greater publicity (of course flipside, muss more regulation and disclosure requirement).

  3. Exposure to analyst coverage, investor confidence (and remember that the main investors are professionals so for them the work of analysts is very important.)

  4. Access to LSE only main market.

  5. Since main investors are institutional, they will tend to be roaming around on the main market, this is an advantage.

AIM only Main Market only AIM and Main Market
Applicant must be a public company X
Minimum market cap of 700,000 X
No restrictions on transferability of shares X
An applicant requires a nominated adviser and a broker X
Applicants must comply with the rules of the London Stock Exchange and the LSE Admission and Disclosure Standards X
Applicants must comply with the Listing, Prospectus, Disclosure and Transparency Rules X (except DTR 5)
25% of the applicant's shares must be held in public hands at the time of admission X
Class 1 transactions will require shareholder approval X
The market has "regulated market" status X
Applicants must publish annual audited accounts no later than four months after the end of the financial period to which they relate X
If a company contravenes its continuing obligations, it may be fined or censured and/or the admission of its securities may be cancelled/suspended X
  1. Steps to be taken by a company in preparation for listing including

Preparation for listing

s. 755

s 90(1)-(3) CA;

s. 21(1)

s 77(1) CA

Prohibition of public offers by private companies

Re-reg as public company

Amendment of articles

Change of name

LR 6.1.3 Accounts
LR 6.1.16 Working Capital

LR 2.2.4R

LR 6.1.23R


Listing Principles

LR 7.2.1

Corporate procedures at LP 2, 4, 5
LR 9.8.6R(5)-(6) Two statements relating to Corporate Governance Code

DTR 7.2.1R

DTR 7.2.2R

DTR 7.2.3R

DTR 7.2.4G

Must include a corp gov statement in directors report

What the corp gov statement must contain a reference to

Publicly available and ‘comply or explain’

A listed company which complies with LR 9.8.6R will satisfy requirements of DTR 7.2.2R and 7.2.3R

UK CG Code





Composition of the Board


Make-up of non-executive v executive

Nomination Committee

UK CG Code




Division of Responsibilities

Chairman and Chief Exec not same person

Chairman on appointment must meet B.1.1. If CEO also Chairman, requirements to be met.

UK CG Code



Remuneration committee

DTR 7.1.1R

DTR 7.1.3R

UK CG Code


Audit Committees and their functions

Relevant Audit body must do certain things

Composition of Audit Committee guidance

s. 273 CA 2006 Qualification of secretaries
Share Capital

LR 2.2.3R

LR 2.2.9R

Admission to trading

Whole class to be listed

s. 551 CA 2006

s. 570(1)

Authority to allot shares

Disap of pre-emption rights

s. 618(1)(a) + (3) Sub-division of shares and resolution needed
LR 2.2.7R Market Capitalisation minimum requirement to be listed

LR 6.1.19R(1)

LR 6.1.19R(3)

Shares in Public hands

Definition of “sufficient number of shares”

LR 6.1.19(4) Examples of when NOT held in “public hands”
LR 6.1.20G Power of FCA to modify the 25% rule in 6.1.19R(3) above, but this is rare.

2. The offer and application process

  1. Methods of offer: offer for subscription, offer for sale and placing

There are two main types: retail and institutional offerings

Retail Institutional
Cost More expensive as must appoint receiving bank to deal with share applications. Also more advertising required which adds to cost Shares offerd through IB and broker directly to investors
Timing More marketing required and share application requests to be processed, so generally takes longer Fewer investors usually identified prior to Launch
Shareholder Liquidity Results in larger shareholder base Lower liquidity as shares held in hands of fewer SH

Retail Offers

  • Includes two elements: offer for subscription (in which new shares are sold to public) and offer for sale (in which existing shares sold). Often both are used in same floatation.

Offer for subscription: “…subscribe for securities not yet in issue..”
A. Company issues new shares as way of raising capital for company
B. Shares offered to public in IPO: Investors subscribe for shares; and
C. Company appoints receiving bank to accept applications from public and eal with payment for shares
Offer for Sale: “…purchase securities of issuer already in issue or allotted…”
  • Offer of existing shares. Sold to public in IPO by selling shareholders. Does not raise any new capital for company. Selling shareholder appoints bank to accept applications and receive payment

Institutional Offers

Placing: “…marketing of securities already in issue but not listed…”
  • Both new and existing shares can be offered by company and selling shareholders. Shares offered to “placees” (clients of sponser, broker, or IB) rather than...

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