LPC 2020 EQUITY FINANCE
Night Before Notes
Table of Contents Going Public
SGS 1 – Flotations: Preparation for Listing 1
s755 CA private company cannot offer its shares to the
SGS 2 – Prospectus 3 public
s90 CA Re-registration as plc
SGS 3 – AIM 9 (1) SR
(3) changes to its name and articles
SGS 4 – Liabilities for share issues 13
SGS 5 – Secondary Issue 23 Minimum share capital
s91(1)(a), 763 Min allotted share capital of £50K
SGS 6 – Secondary Issue: Timetable effects of GM 27 s91(1)(b), 586 At least ¼ of nominal value and whole of premium
SGS 7 – Continuing Obligations 31 paid up
SGS 8 – Preparation for Takeover Bid 38 Documentation to Companies House
s90(1) CA Application in the prescribed form:
SGS 9 – Schemes of Arrangement 47
statement of the proposed name on re-
SGS 10 – Conduct of Takeover Bid 51 registration
(if no secretary) a statement of the
SGS 1 – Flotations: Preparation for Listing company’s proposed secretary
statement of compliance (i.e. that the
Advantages and Disadvantages of Flotation requirements of Part 7 of the CA 2006 as
to reregistration are complied with)
Advantages Disadvantages Accompanied by certain documents including:
1. Access to capital 1. Disclosure, reporting SR
- Way of gaining injection of cash requirements Amended articles
- Expand - LPDT Rules, MAR and LSE’s Balance sheet as required under s92 CA
- Pay existing debt Admission and Disclosure
- Gain many new shareholders; Standards must be observed post- Accounts and working capital
source of future funding for the listing and failure to comply can LR 6.2.1R(1), Audited accounts that cover at least 3 years
company lead to penalties, censure or even (3) Latest accounts for a period ended not more than
the suspension of trading and 6 months before the date of prospectus
2. Market for shareholders listing of a company’s shares. (check the recent audited accounts are end in
- Take advantage of ready-made which month and compare with the proposed float
public markets to trade shares – 2. Management time LR 6.2.1R(4) date)
Main Market or AIM on LSE - process of listing on the Main If have subsidiary, the accounts must be
- Realise their gains by selling their Market or being admitted to AIM LR 6.7.1R consolidated for it too
shares at the time of flotation OR is complex and time-consuming
invest in further shares - directors dedicate almost all time Sufficient working capital for the group’s future
to flotation for months + continue spending needs for at least the next 12 months
3. Public profile to run the business effectively from date of publication of prospectus
- Publicity created by a flotation is Articles (MA not appropriate for listed plc; firms have precedent)
usually good for business 3. Changes to the board Pre-emption Freely transferrable
- The fact that a listed company or - directors need the appropriate rights No pre-emption rights on transfers of shares
AIM company must keep its experience and expertise as this LR 2.2.4 New articles needed
investors informed of its financial will be an important consideration Also check existing shareholders’ agreements:
performance means that its for potential investors + even if shareholders agreed to remove the PE
progress can be closely compliance with CGC rights on transfer, likely necessary for the
monitored, enabling a company shareholders agreement to be terminated
to gain the confidence of its 4. Advisers + the fact that institutional investors are unlikely
investors. - substantial proportion of the cash to want to invest in a company which is the subject
will be used to meet these costs of a shareholders agreement
Eligible for the constitution of the company and the terms of
5. Loss of control CREST its equity shares must be compatible with
- Directors will be subject to electronic settlement (i.e. through CREST)
additional influences and Amend articles to reflect the fact that some of the
pressures on the way that they company’s shares will be held in electronic form
run the company. Corporate Procedures
- Institutional investors can block Comply with spirit of LP, PLP (purpose is to ensure that listed cos pay
resolutions due regard to the role they play in maintaining market confidence)
- Listed companies should also LP 1 reasonable steps to establish and maintain
follow the guidelines issued by the adequate procedures, systems and controls to
bodies which represent enable it to comply with its obligations
institutional shareholders
1
Night Before Notes
Table of Contents Going Public
SGS 1 – Flotations: Preparation for Listing 1
s755 CA private company cannot offer its shares to the
SGS 2 – Prospectus 3 public
s90 CA Re-registration as plc
SGS 3 – AIM 9 (1) SR
(3) changes to its name and articles
SGS 4 – Liabilities for share issues 13
SGS 5 – Secondary Issue 23 Minimum share capital
s91(1)(a), 763 Min allotted share capital of £50K
SGS 6 – Secondary Issue: Timetable effects of GM 27 s91(1)(b), 586 At least ¼ of nominal value and whole of premium
SGS 7 – Continuing Obligations 31 paid up
SGS 8 – Preparation for Takeover Bid 38 Documentation to Companies House
s90(1) CA Application in the prescribed form:
SGS 9 – Schemes of Arrangement 47
statement of the proposed name on re-
SGS 10 – Conduct of Takeover Bid 51 registration
(if no secretary) a statement of the
SGS 1 – Flotations: Preparation for Listing company’s proposed secretary
statement of compliance (i.e. that the
Advantages and Disadvantages of Flotation requirements of Part 7 of the CA 2006 as
to reregistration are complied with)
Advantages Disadvantages Accompanied by certain documents including:
1. Access to capital 1. Disclosure, reporting SR
- Way of gaining injection of cash requirements Amended articles
- Expand - LPDT Rules, MAR and LSE’s Balance sheet as required under s92 CA
- Pay existing debt Admission and Disclosure
- Gain many new shareholders; Standards must be observed post- Accounts and working capital
source of future funding for the listing and failure to comply can LR 6.2.1R(1), Audited accounts that cover at least 3 years
company lead to penalties, censure or even (3) Latest accounts for a period ended not more than
the suspension of trading and 6 months before the date of prospectus
2. Market for shareholders listing of a company’s shares. (check the recent audited accounts are end in
- Take advantage of ready-made which month and compare with the proposed float
public markets to trade shares – 2. Management time LR 6.2.1R(4) date)
Main Market or AIM on LSE - process of listing on the Main If have subsidiary, the accounts must be
- Realise their gains by selling their Market or being admitted to AIM LR 6.7.1R consolidated for it too
shares at the time of flotation OR is complex and time-consuming
invest in further shares - directors dedicate almost all time Sufficient working capital for the group’s future
to flotation for months + continue spending needs for at least the next 12 months
3. Public profile to run the business effectively from date of publication of prospectus
- Publicity created by a flotation is Articles (MA not appropriate for listed plc; firms have precedent)
usually good for business 3. Changes to the board Pre-emption Freely transferrable
- The fact that a listed company or - directors need the appropriate rights No pre-emption rights on transfers of shares
AIM company must keep its experience and expertise as this LR 2.2.4 New articles needed
investors informed of its financial will be an important consideration Also check existing shareholders’ agreements:
performance means that its for potential investors + even if shareholders agreed to remove the PE
progress can be closely compliance with CGC rights on transfer, likely necessary for the
monitored, enabling a company shareholders agreement to be terminated
to gain the confidence of its 4. Advisers + the fact that institutional investors are unlikely
investors. - substantial proportion of the cash to want to invest in a company which is the subject
will be used to meet these costs of a shareholders agreement
Eligible for the constitution of the company and the terms of
5. Loss of control CREST its equity shares must be compatible with
- Directors will be subject to electronic settlement (i.e. through CREST)
additional influences and Amend articles to reflect the fact that some of the
pressures on the way that they company’s shares will be held in electronic form
run the company. Corporate Procedures
- Institutional investors can block Comply with spirit of LP, PLP (purpose is to ensure that listed cos pay
resolutions due regard to the role they play in maintaining market confidence)
- Listed companies should also LP 1 reasonable steps to establish and maintain
follow the guidelines issued by the adequate procedures, systems and controls to
bodies which represent enable it to comply with its obligations
institutional shareholders
1
