Annex 1: Listing in London[189]
The following are the key features of the Premium
Listing regime:
Admission criteria
New applicants for Premium Listing need to have a
three year revenue earning record which must be independently
audited without qualification. They need to control a majority
of their assets and carry on an independent business. The prospectus
accompanying the float needs to make an unqualified statement
that they have sufficient working capital for the company's present
requirements. Their application needs to be accompanied by confirmation
from a 'sponsor firm' (explained below) that, having made due
and careful enquiry, the directors have a reasonable basis for
the statement on working capital (that will be contained in the
prospectus) and have established procedures which provide them
with a reasonable basis on which to make proper judgments on an
ongoing basis as to the financial position and prospects of the
applicant and its group.
Mineral companies have slightly modified admission
criteria: they do not need a three year track record, though what
track record they do have must still be independently audited
and reported on without modification. (NB: a prospectus outlining
a flotation of a mineral company will include a full technical
appraisal of the company's reserves and resources base by an independent
expert.) They do not need to control their assets, but if they
do not, they need to demonstrate they have a reasonable spread
of direct interests in the mineral resources and rights to participate
actively in their extraction.
Sponsor rules
The rules require premium listed companies to retain
a sponsor firm in certain instances to advise the company on its
obligations under the listing regime and to report to the FCA.
A sponsor is a professional advisory firm, typically an investment
bank, which is regulated specifically for the purpose by the FCA
under special rules in the UK listing regime. Such circumstances
include but are not limited to instances when an issuer is to
submit documents to the FCA in connection with an application
for admission of equity shares to Premium Listing, undertakes
significant transactions or related party transactions, or is
required to submit circulars to the FCA for vetting and approval.
Sponsors report to FCA on such matters as the adequacy of an issuer's
working capital for its present requirements and its financial
control environment. Such reports must be made after due and careful
enquiry. The sponsor rules therefore build due diligence into
the regime.
Rules on transactions with related parties
Example of 'related parties' are substantial shareholders
or directors of the company. Where transactions with related parties
are proposed, certain requirements must be adhered to depending
on the size of the transaction. These range from informing the
FCA, confirmation from a sponsor that the terms are fair and reasonable
and including details of the transaction in the next published
annual accounts, to gaining shareholder approval for the proposed
transaction or arrangement. Our engagement with stakeholders on
our current consultation on the listing regime and companies with
controlling shareholders has demonstrated the importance stakeholders
attribute to the related party rules and how they build confidence
in the regime.
Substantial transaction rules
The rules contain requirements to stage shareholder
votes on substantial corporate transactions, i.e. large mergers,
acquisitions and disposals. The rules also require a circular
to be sent to shareholders in such instances and set out in detail
the required content which includes audited financial information
on the target and a working capital statement accompanied by a
confirmation from a sponsor firm that it has been made after due
and careful inquiry.
Pre emption rights
Premium listed companies proposing to issue equity
securities for cash must first offer those securities to existing
shareholders of that class in proportion to their existing holdings.
This requirement can be removed by a vote of shareholders.
189 Financial Conduct Authority (EIS 32) Back
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