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Methods Of Listing Crib Sheet Notes

LPC Law Notes > Public Companies and Equity Finance Notes

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Methods of Listing & Types of Offering 1) Placing a. Defined in Appendix 1 of the Listing Rules a.i. Marketing of securities already in issued but are not listed or not yet in issue, to specified persons or clients of the sponsor or any securities house assisting in the placing, which does not involve an offer to the public or to existing holders of the issuer's securities generally a.i.1. Sponsor (NAME) markets issue to its own (institutional) clients a.i.1.a. DO FACTS SUGGEST ANY ARE INTERESTED IN INVESTING?
b. Advantages b.i. Cheaper b.ii. Discretion over who to place with as can pick to whom to sell the shares b.ii.1. Institutional shareholders b.ii.1.a. Ready source of additional finance b.ii.1.b. Loyalty in the event of a hostile bid b.ii.1.c. Easier to administer than a company with a very long shareholder list b.ii.2. Retail shareholders b.ii.2.a. Liquidity in the shares b.ii.2.b. Enhanced public profile b.ii.2.c. Brand awareness b.iii. Raise lots of capital c. Disadvantages c.i. Institutional shareholders c.i.1. Reduced shareholder base c.i.1.a. Can impede trading as company less liquid c.ii. Retail Shareholders c.ii.1. Expensive to administer 2) Public Offer a. Offer for subscription a.i. Company issues new shares a.i.1. Seller of shares is the company b. Offer for sale b.i. Existing shareholders offer their shares to new shareholders b.i.1. Exit mechanism common for private equity companies b.i.2. Seller of the shares is the shareholder b.i.2.a. ARE THERE SHAREHOLDERS WHO WISH OR NEED TO SELL?
b.i.2.a.i. Are there 25% of shares in public hands?
b.i.2.a.i.1. LR 6.1.19R(4)(a) shares held by other directors will not count towards the 25% level c. Advantages c.i. Can have a broad base of shareholders c.i.1. Increases liquidity of the company which facilitates the trading of shares on the market c.i.2. Offer for subscription raises capital d. Disadvantages d.i. Expensive d.i.1. Involves underwriting d.i.2. If company is not well known, costs of launching can be more expensive as will require marketing

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