Corporate Finance: Revision Summary
INDEX OF ABBREVIATIONS
- RIE – Recognised Investment Exchange
- IPO – Initial Public Offering
- PR – Prospectus Rules
- LR – Listing Rules
- DTR – Disclosure Guidance and Transparency Rules
- LP – Listing Principles
- PLP – Premium Listing Principles
- FSMA 2000 – Financial Services and Markets Act 2000
- RAO – Financial Services and Markets Act 2000 Regulated Activities Order 2001
- FPO – Financial Services and Markets Act 2000 Financial Promotions Order 2005
- MAR – Market Abuse Regulations
- CJA – Criminal Justice Act 2002
- FSA – Financial Services Act 2012
- UK CGC – UK Corporate Governance Code
- RCF – Revolving Credit Facility
- LSE – London Stock Exchange
- AIM – Alternative Investment Market
- FCA – Financial Conduct Authority
- MAC - Material Adverse Change
- EoD – Event of Default
CORPORATE FINANCE: KEY TERMS AND CONCEPTS
- Recognised Investment Exchange (RIE) – Investment exchange recognised by the FCA + exempt from general
prohibition in respect of regulated activities in s.19(1) FSMA 2000 – includes LSE Main Market and AIM.
- Regulated Market – Defined in FCA Handbook – includes Main Market of LSE but NOT AIM.
- Prescribed Market – Defined in FSMA Regulations + includes LSE Main Market and AIM.
- Quoted Company – Company whose equity securities are listed on the Official List.
- Traded Company – Company, any shares of which carry rights to vote at general meetings and are admitted to
trading on a regulated market in an EEA Member State.
- Primary Issue – First time that company makes offer of listed shares – also known as a ‘flotation’ or ‘initial public
offering’ (IPO).
- Secondary Issue – Subsequent issue of shares by a listed company.
- Companies Act 2006 s.755: Prohibition of Public Offers by Private Companies – Private companies prohibited
from offering shares to the public.
- s.756: Public Offer – Includes offers not intended to be limited solely to persons to whom the offer was directly
communicated.
- Public Companies – Generally larger companies capable of offering shares to public – private company can re-
register as a public company by following the procedure in s.90 Companies Act 2006.
- Listed Company – 3rd stage in development of a company where company’s shares are listed on the Official List and
admitted to trading on the Main Market of the LSE.
- Central Securities Depository (CSD) Regulation 2014 – Governs ‘central securities depositories’ in the EU –
aimed to harmonise the timing/conduct of securities transactions + requires all dealings in listed shares to be settled
electronically.
- ‘Central Securities Depositories’ – Institution which holds financial instruments and facilitates electronic transfer of
financial instruments.
- CREST – Computerised system which allows shares to be held/traded electronically between CREST members by
issue of instructions to CREST regarding the price/number of shares being transferred BUT only UK listed companies
or companies established in other jurisdictions which have adopted the CREST system can be traded using CREST – 4
ways in which investors may operate CREST accounts:
(a) Direct Users – Have direct connection to CREST – usually banks/stockbrokers who settle trades on CREST on
daily basis.
(b) Sponsored Members – No direct connection to CREST but appoint a direct user to communicate with CREST
on their behalf.
(c) Shares Held Through Nominee – Shareholder appoints a direct user to act as their nominee and hold shares on
behalf of the shareholder in a nominee account – nominee’s name appears on company’s register of members and
holds legal title to the shares BUT agrees to forward all communications/dividends/other payments received from
company to shareholder.
(d) Non-CREST Members – Shareholders who are NOT CREST members wishing to transfer shares into CREST
to sell them in course of a flotation must use a CREST Transfer Form.
ANALYSIS OF LISTING SECURITIES
1
INDEX OF ABBREVIATIONS
- RIE – Recognised Investment Exchange
- IPO – Initial Public Offering
- PR – Prospectus Rules
- LR – Listing Rules
- DTR – Disclosure Guidance and Transparency Rules
- LP – Listing Principles
- PLP – Premium Listing Principles
- FSMA 2000 – Financial Services and Markets Act 2000
- RAO – Financial Services and Markets Act 2000 Regulated Activities Order 2001
- FPO – Financial Services and Markets Act 2000 Financial Promotions Order 2005
- MAR – Market Abuse Regulations
- CJA – Criminal Justice Act 2002
- FSA – Financial Services Act 2012
- UK CGC – UK Corporate Governance Code
- RCF – Revolving Credit Facility
- LSE – London Stock Exchange
- AIM – Alternative Investment Market
- FCA – Financial Conduct Authority
- MAC - Material Adverse Change
- EoD – Event of Default
CORPORATE FINANCE: KEY TERMS AND CONCEPTS
- Recognised Investment Exchange (RIE) – Investment exchange recognised by the FCA + exempt from general
prohibition in respect of regulated activities in s.19(1) FSMA 2000 – includes LSE Main Market and AIM.
- Regulated Market – Defined in FCA Handbook – includes Main Market of LSE but NOT AIM.
- Prescribed Market – Defined in FSMA Regulations + includes LSE Main Market and AIM.
- Quoted Company – Company whose equity securities are listed on the Official List.
- Traded Company – Company, any shares of which carry rights to vote at general meetings and are admitted to
trading on a regulated market in an EEA Member State.
- Primary Issue – First time that company makes offer of listed shares – also known as a ‘flotation’ or ‘initial public
offering’ (IPO).
- Secondary Issue – Subsequent issue of shares by a listed company.
- Companies Act 2006 s.755: Prohibition of Public Offers by Private Companies – Private companies prohibited
from offering shares to the public.
- s.756: Public Offer – Includes offers not intended to be limited solely to persons to whom the offer was directly
communicated.
- Public Companies – Generally larger companies capable of offering shares to public – private company can re-
register as a public company by following the procedure in s.90 Companies Act 2006.
- Listed Company – 3rd stage in development of a company where company’s shares are listed on the Official List and
admitted to trading on the Main Market of the LSE.
- Central Securities Depository (CSD) Regulation 2014 – Governs ‘central securities depositories’ in the EU –
aimed to harmonise the timing/conduct of securities transactions + requires all dealings in listed shares to be settled
electronically.
- ‘Central Securities Depositories’ – Institution which holds financial instruments and facilitates electronic transfer of
financial instruments.
- CREST – Computerised system which allows shares to be held/traded electronically between CREST members by
issue of instructions to CREST regarding the price/number of shares being transferred BUT only UK listed companies
or companies established in other jurisdictions which have adopted the CREST system can be traded using CREST – 4
ways in which investors may operate CREST accounts:
(a) Direct Users – Have direct connection to CREST – usually banks/stockbrokers who settle trades on CREST on
daily basis.
(b) Sponsored Members – No direct connection to CREST but appoint a direct user to communicate with CREST
on their behalf.
(c) Shares Held Through Nominee – Shareholder appoints a direct user to act as their nominee and hold shares on
behalf of the shareholder in a nominee account – nominee’s name appears on company’s register of members and
holds legal title to the shares BUT agrees to forward all communications/dividends/other payments received from
company to shareholder.
(d) Non-CREST Members – Shareholders who are NOT CREST members wishing to transfer shares into CREST
to sell them in course of a flotation must use a CREST Transfer Form.
ANALYSIS OF LISTING SECURITIES
1
