The Extractive Industries - Business, Innovation and Skills Committee Contents


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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Prepared 28 October 2014