Related Party Transactions Crib Sheet - Public Companies and Equity Finance

Related Party Transactions

1. Is the company premium-listed?

   1. LR 11.1.1R Chapter 11 applies to a company that has a premium listing

      1. LR 11.1.2G(1) & (2) Chapter 11 applies safeguards to transactions and arrangements between a listed company on the one hand and related parties on the other to prevent the related party taking advantage of its position
         

2. Is there a transaction?

   1. LR 11.1.3R A transaction is a reference to the entering into the agreement for the transaction

      1. APPLY TO THE FACTS

3. Is there a related party?

   1. A related party is

      1. LR 11.1.4R(1) A substantial shareholder?

         1. Appendix 1.1 LR a substantial shareholder man a person with more than 10% voting shares in the listing company

            1. A company is a legal person

      2. LR 11.1.4R(2) Director or Shadow Director?

         1. Equitable Life Director includes a non-executive director

      3. LR 11.1.4R(4) A person exercising significant influence

      4. LR 11.1.4R(5) An associate of a related party (Is there an associate of a person? Is that person a related party?)

         1. Appendix 1.1 an associate of a director means a director’s

            1. Spouse, civil partner or child

            2. Trustee of any trust of which the director is a beneficiary or their family are

            3. Any company in whose shares the director and member of his family are able to exercise or control 30% or more of the votes at a GM or appoint/remove directors

         2. Appendix 1.1 an associate in relation to a substantial shareholder means

            1. Any other company which is its subsidiary or parent or fellow subsidiary or parent

            2. Any company whose directors are accustomed to act in accordance with the substantial shareholder’s directors

            3. Any company in the capital of which the substantial shareholder and the first company taken together would be a substantial shareholder

4. Is there a related party transaction?

   1. LR 11.1.5R(1) A transaction between a listed company and a related party

   2. LR 11.1.5R(2) An arrangement pursuant to which a listed company and a related party each invests in, or provides finance to, another undertaking or asset

   3. LR 11.1.5R(3) A transaction between a listed company and any person, the purpose and effect of which is to benefit a related party

5. Class Tests

   1. LR 10, Annex 1, Para 8 The latest published accounts should be used, but in the absence of these the preliminary statement of annual results can be used

      1. APPLY TO FACTS

   2. LR 10 Annex 1, Para 2R Gross Asset Test

      1. (Gross assets which are transaction subject/Gross assets of listed company) X 100

   3. LR 10 Annex 1, Para 4R Profits Test

      1. (Profits attributable to assets which are transaction subject/Profits of listed company) X 100

   4. LR 10 Annex 1, Para 5R Consideration Test

      1. (Consideration for transaction/Aggregate market value of listed company’s ordinary shares) X 100

   5. LR 10 Annex 1, Para 7R Gross Capital Test

      1. (Gross capital of the company or business being acquired/gross capital of listed company) X 100

         1. Para 7R(2) This test does not apply where there has been a disposal

   6. LR 10 Annex 1, Para 10G The FSA can modify the class tests

6. Classification

   1. Class 3

      1. LR 10.2.2R(1) If all of the percentage ratios are less than 5%

   2. Class 2

      1. LR 10.2.2R(2) If any of the percentage ratios is 5% or more, but each percentage ratio is less than 25%

         1. information to the RIS

   3. Class 1

      1. LR 10.2.2R(3) If any of the percentage ratios is 25% or more

   4. Reverse Takeover

      1. LR 10.2.2R(4) If a listed company acquires a business, an unlisted company or assets, and either any percentage ratio is 100% or more, or the transaction will result in a fundamental change in the business or a change in the board, or in voting control of the listed company, the transaction will be a reverse takeover

7. Do any Exemptions apply?

   1. Full Exemptions – LR 11.1.6R Related party rules will...