Very good quick guide for Listing equity in London.
I promise my friends at BLP to introduce it to my network.
David Solomon
CEO, SOLOMON CAPITAL
www.solomon-capital.com
2. Our experienced team
has continued to build
its market share of
equity capital markets
transactions, for both
UK and international
business, capitalising
on the firm’s deep market
presence and our industry
sector strengths.
David Collins
Partner, Head of Corporate
Your guide to listing in London
Listing a company on a public market is a significant milestone
in the company’s life. A listing gives a company access to a
large investor base and to a deep pool of capital. It is critical
to make the right decisions from an informed perspective.
We have put together this guide to listing equity in
London to give you an overview of the key issues involved.
It examines some of the major decisions you will need to
make to achieve a successful IPO, the eligibility requirements
for the different markets in London, a typical timetable
for a listing, continuing obligations once you are listed and
the UK corporate governance requirements.
Our team of over 100 corporate lawyers coupled with our
international preferred firms network in over 100 countries
enable us to deliver cross-border deals in most jurisdictions.
In addition, if you are looking to access the US market at
the same time we work closely with highly respected US law
firms who are able to provide the necessary US securities
advice and legal opinions.
The IPO and listing process can seem somewhat daunting
but we are happy to talk you through the process and
discuss any questions you may have.
Listing equity in London /01
Berwin Leighton Paisner LLP
The whole team is very
commercially aware and more
than able to guide me through
what I need to know. They
always meet deadlines and are
keen to get on with the job.
Chambers UK, 2012
David Collins
Partner, Head of Corporate
david.collins@blplaw.com
3. Listing equity in London /03
by volume for EMEA equity
and equity related deals 2010
by manager/legal adviser
number one legal adviser for
small and mid-cap UK flotations
and AIM for six consecutive years
5th
02/ Listing equity in London
IPO considerationsAt a glance
countries in which BLP has worked
At a glance
The following facts and
figures provide a quick
introduction to BLP’s
Corporate Finance practice
>20equity capital markets
transactions completed
in the past two years
130x5five times winner of ‘Law Firm
of the Year’ in the last decade
corporate finance and funds
specialists in our team
offices in international locations:
Abu Dhabi, Beijing, Berlin,
Brussels, Dubai, Frankfurt,
Hong Kong, London,
Moscow, Paris, Singapore
11
>100
top-tier corporate finance
related rankings in the legal
directories in the past five years
15
IPO considerations
The following are questions for any Company
looking to start an IPO process? They are not
definitive and invariably lead to more questions.
What is the Company looking
to achieve from the IPO?
What are the Company’s aims? Is the
purpose of the IPO to raise funds, to raise
profile, to achieve liquidity in its shares
or an exit? Is the Company looking to
achieve entry to a FTSE index? Is an IPO
the best way to achieve those aims?
Which is the appropriate market for
the Company to be admitted/listed?
Eligibility, continuing obligations,
geographic location and the suitability
of the market to achieving the aims of
the IPO are among the factors to be
considered. See pages 5, 10 and 11
What are the liabilities
associated with the process?
Who is responsible for the documents
(at law or under stock exchange
rules)? What form of responsibility
acknowledgements will the directors’
accept or have to accept? What
warranties or indemnities will be given
in any underwriting or placing agreement
and with what limits. See page 7
Are there specific requirements
for the type of company?
For mining and oil and gas
companies there will be a requirement
for a Competent Person’s Report.
Property companies will have meet the
requirements in relation to valuations.
Specific types of companies may have
less stringent requirements in relation to
historic independent operation or historic
audited accounts (i.e. mineral companies).
What is the timing of
the IPO?
Is timing driven by need for funds?
When can the Company deliver financial
information? Other factors involved in
timing include market conditions and the
impact of other parties’ fundraisings on the
market. A timetable should be developed
early in the process. See pages 8 and 9
What vehicle should be used
for the IPO?
Where the listed company is situated
may be determined by commercial
or tax reasons but some jurisdictions
may not be as appropriate for a company
on a regulated market or seeking to
raise funding.
Does the structure of the
Company or the Group need
to be changed for the IPO?
Is a reorganisation required prior to IPO?
What are the commercial and timing
implications of the reorganisation?
What advisers does the Company
need for the IPO process and when
should they be appointed?
Financial Advisers (Broker/Sponsor/
Nomad), accountants, lawyers and
public relations advisers. All need to
have appropriate expertise and be
appointed having regard to the aims and
timetable of the IPO. Does the Company
or the Board want a project manager or
independent financial adviser?
Q Q
Q
Q
Q
Q
Q
Q
A A
A
A
A
A
A
A
#1
2007 - 2012
UK
LEGAL ADVIS
ER
4. Key eligibility criteria for listing
What financing is associated
with the IPO and what is the
best structure for the financing?
Is the fundraising to raise working
capital, to raise funds for acquisitions or
to provide an exit for shareholders? Are
funds coming from institutions or is there
a public offer element? What jurisdictions
is marketing to be carried out in? Is there a
US element to the fundraising? Will special
arrangements be needed to enable
employees or customers to participate?
What valuation is to be put
on the Company?
Are the indications that the market will
value the Company within acceptable
parameters? What dilution are existing
shareholders willing to accept? What
proportion of the company will be in
public hands? See page 5
What are the key messages
in the IPO and what information
has to be disclosed?
What are the key messages that the
Company and the brokers want to get
across? What information is required to meet
regulatory/market requirements? Are there
any risks or information that will be sensitive
and if so how are they presented?
Can the Company meet
the continuing obligation
requirements?
Different markets have different continuing
obligations. The Company and the
Board need to understand and evaluate
the continuing obligations. Institutional
shareholder organisations may impose
more onerous obligations than the market
itself. Does the UK Takeover Code apply?
See pages 10 and 11
What is the proposed board
structure of the Company?
What is the right mix of executive and
non-executive directors? Are there
sufficient independent directors? Do
the directors understand their duties
and obligations and are they suitably
experienced? See page 12
Does the Company have
adequate reporting lines in place?
A quoted company must have structures
in place throughout its group to identify
risks and to ensure that the board and
the market are kept informed of the
performance of the business.
Does the Company have
sufficient corporate governance
structures in place?
What board committees need to be
put in place? Is there a substantial
shareholder which might need to enter
into a relationship agreement? Are the
appropriate procedures and safeguards
in place in relation to future share
dealings? What are the implications
on employee incentive arrangements?
Will the management be
able to devote sufficient time
to the process?
An IPO is an intensive process of
information gathering, reporting and
structuring. The management needs
to be able to devote time to the process
without detriment to the Company’s
operations and business.
Listing equity in London /05
Good, thorough knowledge
of law and practice.
Legal 500 UK, 2012
Q Q
Q
Q
Q
Q
Q
Q
A
A
A
A
A
A
A
A
IPO considerations
04/ Listing equity in London
Key eligibility criteria for listingIPO considerations cont.
Criteria Main market
premium listing
(equity shares)
Main market
standard listing
(shares)
Main market
HighGrowthSegment
(equity shares)
AIM
Incorporation Anywhere EEA State Anywhere
Regulation Regulated Market (Official List) Regulated Market Multilateral trading facility
Rules Listing Rules, Admission and Disclosure Standards,
Prospectus Rules
High Growth Segment
Rulebook, Admission and
Disclosure Standards,
Prospectus Rules
AIM Rules, Prospectus
Rules if public offer
Prospectus/Admission
Document
Prospectus Admission Document
Prospectus if public offer
Minimum free float 25% 25% 10% and a value of £30m NOMAD assessment
of suitability
Minimum market
capitalisation
£700,00 N/A but see above NOMAD assessment
of suitability
Audited historical
financial information
Three years Three years or such shorter period
Revenue earning 75% of business
supported by revenue
earning record for three
year historic period
N/A Growth of at least 20%
on a CAGR basis for three
year historic period
N/A but see lock-ins
Controls majority
of its assets
For the three year
historic period
N/A From admission N/A
Transferability
of shares
Freely transferable
Working capital
statement
Clean 12 month statement Clean/qualified 12 month statement Clean 12 month statement
Adviser required Sponsor N/A Key adviser NOMAD
Settlement Eligible for electronic settlement
Lock-ins N/A If the applicant has not
been independent and
revenue earning for at
least two years, lock ins for
one year from admission
5. BLP has been widely
acknowledged as ‘totally
committed; they put in the
hours and the effort’.
Chambers UK, 2013
Liability and responsibility
Listing equity in London /07
Liability and responsibility
*NB the table above is based upon a standard international IPO and does not take into account any local
legal and regulatory requirements
Liable for the contents
at law jointly and severally
with directors
Liable for the contents
at law jointly and severally
with the Company
No
Yes Not usually applicable
(although check local
listing requirements)
Not usually applicable
(although check local
listing requirements)
Required to give warranties
and indemnities in favour of
the Bank; warranties may be
limited in time and amount;
indemnity will generally be
uncapped
Executive directors required
to give warranties in favour of
the Bank; warranties will be
limited in time and amount;
NED’s typically give “offer
related” warranties only and
liability caps are smaller
Required to give limited
warranties (as to title and
capacity) in favour of the
Bank; warranties will be
uncapped
Under an obligation to act
in a certain way in certain
circumstances i.e. re:
appointment of directors etc.
N/A Shareholder will be bound
by various undertakings
and restrictions, including
conducting business with the
Company on an arms’ length
basis and permitting the
Company to operate without
influence of Selling Shareholder
Letters of comfort given in
favour of the Bank regarding
compliance with Listing Rules,
disclosure obligations and
certain other procedures
Directors will be required to
give “Responsibility Letters”
in favour of the Company
and the Bank
N/A
Letters of comfort given
to support information
provided to, and underlying
role performed by, reporting
accountants, i.e. working
capital, financial reporting
procedures, tax, significant
change, financial information
N/A N/A
Offering Circular
and related
presentation
Stock Exchange
confirmations
Underwriting/
Placing/Introduction
Agreement
Relationship
Agreement
Comfort letters
in favour of THE Bank
Comfort letters in
favour of Reporting
Accountants
Responsible
Party
Company Director
Selling
Shareholder
6. International IPO timetableInternational IPO timetable
Listing equity in London /0908/ Listing equity in London
International IPO timetable
(without reorganisation)
KEY DATES
LEGAL
FINANCIAL
TECHNICAL
PROSPECTUS/
ADMISSION
DOCUMENT
INVESTORS/
MARKETING
BOARD MEETINGS
DUE DILIGENCE
WORKING CAPITAL
TECHNICAL REPORT
PLACING AGREEMENT
REPORTING PROCEDURES/ SIGNIFICANT CHANGE
DIRECTORS QUESTIONNAIRES/ BOARD PACKS
FINANCIAL DUE DILIGENCE/ LONG FORM
ADMISSION DOCUMENT/ AIM
INVESTORS
INVESTORS
PROSPECTUS/ MAIN MARKET
ANNOUNCEMENTS
VERIFICATION
ADMISSION DOCUMENT/ PROSPECTUS
INTENTION TO FLOAT PATHFINDER IMPACT DAY ADMISSION
UKLA review 2Draft 1 Draft 2 UKLA review 1 Finalise Pathfinder Finalise P-ProofDraft 3
Draft 1 Draft 2 Draft 4 Finalise Pathfinder Finalise P-ProofDraft 3
Company prepares model Review by accountants Draft 1 Challenge Draft 2 Update
Draft Negotiate Finalise
Draft UpdateReview
Scope Draft 1 UpdateReview Draft 2 Draft 3
Draft Review Finalise Update
Scope Draft 1 Draft 2 Draft 3 Draft 4 Update
Drafting Finalise Pathfinder Finalise P-Proof
Test Marketing Investor road show
Prepare teaser Analyst prepares research Prepare presentation Investor roadshowTest Marketing
Intention to float
Verify Update
Scope Draft 1 Draft 2 Draft 3 Finalise Update
Intention to float
Draft4
UKLA
review3
Prepare
intention
to float
Prepare
announcement
of listing
Key
Board meeting
Final form
Substantially complete
Signature
Admission
Determineshareofferprice
WEEK
1
WEEK
2
WEEK
3
WEEK
4
WEEK
5
WEEK
6
WEEK
7
WEEK
8
WEEK
9
WEEK
10
WEEK
11
WEEK
12
WEEK
13
WEEK
14TIMELINE
7. Criteria Main market
premium listing
(equity shares)
Main market
standard listing
(shares)
Main market
HighGrowthSegment
(equity shares)
AIM
Prospectus/Admission
document for further
issues of shares
Yes (unless <10% shares of same class
admitted to trading in 12 month period)
Yes (unless <10%
shares of same class
admitted to trading in
12 month period) and a
Form 1 must be submitted
to exchange
Only if public offer
Significant transactions
(Class Tests)
Transactions (other
than ordinary course
of business) which
are significant in size
(Class 1 acquisitions/
disposals and reverse
takeovers (RTO) require
shareholder approval
and a circular (plus a
prospectus if RTO)
N/A Transactions (other
than ordinary course
of business) which are
notifiable (25% or more
on class tests) must be
notified to an RIS as soon
as possible after the
terms are agreed
RTOs and fundamental
disposals require
shareholder approval
and circular/admission
document. Other
non-ordinary course
transactions require
disclosure only
Related party
transactions
Independent shareholder
approval required and
“fair and reasonable”
statement
N/A Transactions with a
related party where the
class test is 5% or more
must be notified to an RIS
as soon as possible after
the terms are agreed
Disclosure and
“fair and reasonable”
statement only
Application of UK
Takeover Code
Target incorporated in the UK, Channel Islands
or Isle of Man – UK Takeover Code applies
Target incorporated elsewhere in EEA –
UK Takeover Panel will have shared jurisdiction
Target incorporated outside the EEA –
UK Takeover Code will not apply
Sponsor, NOMAD or
key adviser required
Yes. Certain transactions
and circumstances only
e.g. where a prospectus
or class 1 circular is
required; or in connection
with a RTO/related party
transaction; or where
breach of Listing Rules;
or when transferring
from investment co to
commercial co with
Premium Listing status
or vice versa
N/A only required when
transferring from a
Standard Listing (shares)
to a Premium Listing
Yes. Key adviser
required for certain
transactions only e.g.
notifiable transactions,
or in connection with
a RTO/related party
transaction
NOMAD required
at all times
Obligation to publish
annual and half-year
financial reports and
interim management
statements (IMS)
Yes (DTR 4) Yes but not IMS
Continuing obligationsContinuing obligations
Continuing obligations1
Listing equity in London /1110/ Listing equity in London
Criteria Main market
premium listing
(equity shares)
Main market
standard listing
(shares)
Main market
HighGrowthSegment
(equity shares)
AIM
Obligation to publish
inside information and
insider lists
Yes (DTR 2) Yes (insider lists N/A)
Major shareholder
notification regime
applies
Yes (DTR 5) Yes
Director/senior manager
dealing disclosures
Yes (DTR 3) Yes
Corporate governance UK Corporate
Governance Code and
corporate governance
statement (DTR 7.2).
Overseas company
comply with DTR 7.2 if
no equivalent rule and
“comply or explain”
against the UK Corporate
Governance Code
DTR 7.2 applies to
UK and extended to
overseas companies
if no equivalent rule
Issuer will be required to
report on its corporate
governance practices
in its annual report
Market practice is to
comply with UK Corporate
Governance Code or
(for smaller companies)
QCA Corporate
Governance Code
Listing Principles Yes N/A
Share dealing code Yes N/A Yes
Pre-emption rights Yes2
N/A local company law only
Transfer between listing
categories (cancellation
of listing not required)
75% shareholder
approval to transfer
within Premium listing
or transfer Premium
commercial co to
Standard commercial
No shareholder approval
required
No shareholder approval
required to transfer to
Premium listing. 75%
shareholder approval to
transfer to Standard listing
N/A
Cancellation of listing 75% shareholder approval.
Not required if takeover
offer or scheme
No shareholder approval
required but 20 business
days’ notice
75% shareholder approval
and 20 business days’
notice. Not required if
concurrent application
to Premium listing or
if takeover
75% shareholder approval
and 20 business days’
notice
FTSE eligibility FTSE UK Series,
where eligible3
N/A FTSE AIM Series,
where eligible
1 References to the DTRs assume in most cases UK incorporated companies
2 An overseas company with a Premium Listing must offer pre-emption rights
unless it has shareholder approval to disapply such rights. If no equivalent rule
of law to LR 9.3.11 (pre-emption rule), an overseas company applying for a
Premium Listing now must provide for equivalent rights in its constitution
(LR 6.1.25) as qualified by LR 9.3.12
3 Non-UK company needs 50% free float to be considered eligible for UK FTSE
Indices (see section 4.2.3 FTSE Ground Rules for the Management of UK
Series of the FTSE Actuaries Share Indices)
8. Board composition
12/ Listing equity in London
Board composition
UK Corporate Governance Code1
THEBoardSHAREHOLDERSCOMMITTEESCOMMITTEES
Nomination
Majority of independent NEDs.
Chairman/independent NED should
be chair. Responsible for board
appointments; search for candidates
should be on merit against objective
criteria with due regard to diversity
on the board, including gender
Remuneration
At least three independent
NEDs (except for smaller
companies). Chairman can be
a member of but not chair the
committee. Responsible for setting
remuneration for all executive
directors and the chairman
Audit
At least three independent NEDs
(except for smaller companies).
One member should have recent
relevant financial experience.
Responsible for monitoring integrity
of company’s financial statements
and internal financial controls
1 Companies with a premium listing of equity shares on the Main Market must
“comply or explain” against the UK Corporate Governance Code. Companies
with a standard listing or on the HGS must publish a corporate governance
statement (DTR 7.2). It is market practice for AIM companies to comply with the
QCA Corporate Governance Code or the UK Corporate Governance Code
2 Factors which determine independence: employee of the group within last
five years; material business relationship with the company, within the last
three years, directly or indirectly; close family ties with any directors, senior
employees or company’s advisers; has served on the board for more than
nine years; represents a significant shareholder; has received additional
remuneration from the company excluding a director’s fee; or holds cross-
directorships or has significant links with other directors through other companies
Independent NED’s
There should be one senior
independent director
Directors
The board should have
appropriate balance of skills,
experience and knowledge
C
£C
SID
50%
or more of the board
should be independent NED’s,
excluding the chairman. For FTSE
350 companies annual re-election
of all directors and external board
evaluation is required every three years
Chairman
Should be independent2
and is responsible
for leadership of the board. He/she should
ensure the views of shareholders are
communicated to the board and
discuss governance and strategy
with major shareholders
About BLP
Today’s world demands clear, pragmatic legal
advice that is grounded in commercial objectives.
Our clients benefit not just from our excellence in
technical quality, but also from our close understanding
of the business realities and imperatives that they face.
Our achievements for clients are made possible
by brilliant people. Prized for their legal talent and
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Our approach has seen us win five Law Firm of the
Year awards and three FT Innovative Lawyer awards.
With experience in over 70 legal disciplines and
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9. Clients and work in 130 countries, delivered via offices in:
Abu Dhabi, Beijing, Berlin, Brussels, Dubai, Frankfurt, Hong Kong, London, Moscow, Paris and Singapore
www.blplaw.com
Getting in touch
When you need a practical legal solution for
your next business opportunity or challenge,
please get in touch.
London
Adelaide House, London Bridge
London EC4R 9HA England
David Collins
T: +44 (0)20 3400 2218
david.collins@blplaw.com
This document provides a general summary only and is not intended to be comprehensive nor legal advice.
Specific legal advice should always be sought in relation to the particular facts of a given situation.