6. Further Issues

Question 1

what is equity finance

Answer 1

where a co uses it equities (share) to raise finance

Question 2

what is a secondary issue

Answer 2

subsequent issue of new shares & the listing of those shares

Question 3

why might a co need it>

Answer 3

pay off debt
buy something
concerns re gearing

Question 4

procedure for a listed co to issue more shares of a class already listed

Answer 4

seek admission to listing on the official list and admission to trading on the main market

Question 5

prospectus rules on further issue

Answer 5

same as that of an ipo (art 1(4) PRR) and 3(2) UKPR

Question 6

when can a co opt for simplified disclosure

Answer 6

if it qualifies under art 14 UKPR
any co whose
- shares have been admitted for trading;
- continuously for the past 18 months;
- issues shares of the type already admitted to trading

Question 7

when is a supplementary prospectus required

Answer 7

there arises any:
- significant new factor
- material mistake
- inaccuracy re the info provided

Question 8

how must the co communicate with its shareholders

Answer 8

via circular UKLR 10.3 & 6

Question 9

what is a nominee SH

Answer 9

the registered owner of a share , but holds that share on trust for the benefit of another person the ‘beneficial owner’

Question 10

what must the co maintain

Answer 10

a register of members s113 CA

Question 11

what is the purpose of ch 5 DTR

Answer 11

ensure that co’s whose shares are traded on the stock exchange are made aware of the identity of beneficial owner sof their shares

Question 12

when must a person notify a UK co

Answer 12

if voting rights they hold reaches, exceeds, or falls below 3% and every whole percentage above 3% up to 100% DTR 5.1.2R

Question 13

what must a co do where there has been an increase / decrease in voting rights

Answer 13

publish a statement of the new total number of voting rights in the co through an RIS DTR 5.6.1R

Question 14

how are fractional percentages calculated?

Answer 14

the percentage figure is rounded down to the next whole number DTR 5.1.1R

Question 15

what is the rule for indirect holdings per DTR 5.1.2R

Answer 15

person must include any indirect holdings of voting rights

Question 16

who must be notified and how when disclosing interest in shares

Answer 16

person must notify the o in which they hold the voting rights (5.1.2R) and DTR 5.8.2R a copy of the notification must be sent to the FCA

Question 17

deadline for notifying an interest in shares

Answer 17

within 2 trading days after the day when the person became aware, or should have become aware, of the acquisition / disposal

Question 18

what are the co’s powers when investigating beneficial ownership

Answer 18

co can investigate on its own initiative pursuant to s793 CCA 2006;or

because a SH has compelled it to do so under s 803

Question 19

what can a co do under s793 CA

Answer 19

serve a s793 notice on that person, asking them to confirm whether or not they do have such an interest, details of those interest, and other rekevant information;

state a reasonable time within which the recipient must respond (interpreted as 2 days)

Question 20

what is a s803 requsition

Answer 20

sh holding 1/10th of the paid-up voting share capital can requisition the co to use its powers under s793

Question 21

sanctions for fail to comply with s793 notice or knowingly / recklessly make a false statement in reply

Answer 21

criminal offence unde rs795(2) CA 2006;

punishable for up to 2 years imprisonment and/or a fine

Question 22

what is a rights issue

Answer 22

an offer to issue new or transfer existing shares to existing shareholders in proportion to their existing shareholdings made by way of renounceable letter which may be traded nil paid for a period before payment for the shares

Question 23

discount for rights issue

Answer 23

deep discount to market value as long as price exceeds nominal value

Question 24

how is the offer to shareholders made for a rights issue

Answer 24

renounceable letter (provisional allotment latter)

Question 25

what does a pal do

Answer 25

provisionally allot to SH the pro rata entitlement of shares

Question 26

what can a SH do upon receiving PAL

Answer 26

take up the rights, by subscribing for the shares renounce the rights and sell them on to a third party by subscribing for the shares combine (take up some rights and renounce the rest) do nothing

Question 27

how long must an offer be open for in a rights issue

Answer 27

up to at 14 days

Question 28

how can a sh renounce her rights and trade them to subscrimber

Answer 28

PAL is negotiable - can be transferred whilst the offer is open for 14 days. SH signs the PAL and passes it onto someone else.

Question 29

why would a sh choose to do nothing in a rights issue

Answer 29

arrangements are made for the sale of shares not taken up -sh may still receive a cash payment to the extent that the shares which were provisionally allotted to her are sold in the market for more than their subscription price

Question 30

what do underwriters do

Answer 30

agree to take up shares which are not taken up by shareholders and that which cant be sold on the market (inc fractional entitlements) the stick

Question 31

do pre-emption rights (s561) apply to rights issue

Answer 31

no as a rights issue is pre-emptive but it must comply with s562 structure a) must be in hard copy or electronic b) must state a period of not less than 14 days during which it can be accepted c)such period begins i) for an offer made in hard copy with the date on which the offer was sent or supplied ii) for an offer made electronically, with the date on which the offer was sent

Question 32

what must the co do when issuing shares to convertible share holders

Answer 32

if the terms of the securities entitle holder to pre-emption rights but under the ca 2006 holder is not entitled to pre emption rights, co must disapply 561

Question 33

what is an open offer

Answer 33

offer to issue new shares or transfer existing shares to existiing sh in proportion to their existing shareholdings. the offer is not made by way of PAL, but an application orm

Question 34

discount max for open offer

Answer 34

cannot be more than 10% of market value

Question 35

can a sh trade shares in open offer

Answer 35

no they can either acept or do nothing

Question 36

min offer period for an open offer

Answer 36

10 buisiness days from date of posting application forms

Question 37

what is a placing

Answer 37

an offer by co to issue or transfer shares to specified persons or clients of any financial adviser assisting in the placing which does not involve an offer to the public or to existing holders of the co's security

Question 38

discount limit for placing

Answer 38

no more than 10% of market value

Question 39

disadvantages of a placing

Answer 39

s561 disapplication is required; pre-emption group statement of principles restrict the number of shares which can be issued

Question 40

what is an acquisition issue

Answer 40

a share for share exchange an issue of new shares by the co to the seller of an asset(s) in consideration for the acquisition by the co of that asset(s)