LR 13.8 Other circulars

A circular relating to a resolution proposing to grant the directors' authority to allot shares or other securities pursuant to section 551 (Power of directors to allot shares etc: authorisation by company) of the Companies Act 20066 must include:

1. (1)

   a statement of the maximum amount of shares or other securities6 which the directors will have authority to allot and the percentage which that amount represents of the total ordinary share capital in issue (excluding treasury shares) as at the latest practicable date before publication of the circular;

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2. (2)

   a statement of the number of treasury shares held by the company as at the date of the circular and the percentage which that amount represents of the total ordinary share capital in issue (excluding treasury shares) as at the latest practicable date before publication of the circular;

3. (3)

   a statement by the directors as to whether they have any present intention of exercising the authority, and if so for what purpose; and

4. (4)

   a statement as to when the authority will lapse.

A circular relating to a resolution proposing to disapply pre-emption rights provided by LR 9.3.11 R must include:

1. (1)

   a statement of the maximum amount of equity securities which the disapplication will cover; and

2. (2)

   if there is a general disapplication for equity securities for cash made otherwise than to existing shareholders in proportion to their existing holdings, the percentage which the amount generally disapplied represents of the total equity share capital5 in issue as at the latest practicable date before publication of the circular.

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A circular relating to a resolution proposing to reduce the company's capital, other than a reduction of capital pursuant to section 626 of the Companies Act 2006 (Reduction of capital in connection with redenomination),4 must include a statement of the reasons for, and the effects of, the proposal.

1. (1)

   A circular relating to a resolution proposing a capitalisation or bonus issue must include:

   1. (a)

      the reason for the issue;

   2. (b)

      a statement of the last date on which transfers were or will be accepted for registration to participate in the issue;

   3. (c)

      details of the proportional entitlement; and

   4. (d)

      a description of the nature and amount of reserves which are to be capitalised.

2. (2)

   Any timetable set out in the circular must have been approved by the RIE on which the company's equity securities are traded.

1. (1)

   A circular containing an offer to shareholders of the right to elect to receive shares instead of all or part of a cash dividend must include:

   1. (a)

      a statement of the total number of shares that would be issued if all eligible shareholders were to elect to receive shares for their entire shareholdings, and the percentage which that number represents of the equity shares (excluding treasury shares) in issue at the date of the circular;

   2. (b)

      in a prominent position, details of the equivalent cash dividend foregone to obtain each share or the basis of the calculation of the number of shares to be offered instead of cash;

   3. (c)

      a statement of the total cash dividend payable and applicable tax credit on the basis that no elections for the scrip dividend alternative are received;

   4. (d)

      a statement of the date for ascertaining the share price used as a basis for calculating the allocation of shares;

   5. (e)

      details of the proportional entitlement;

   6. (f)

      details of what is to happen to fractional entitlements;

   7. (g)

      the record date; and

   8. (h)

      a form of election relating to the scrip dividend alternative which:

      1. (i)

         is worded so as to ensure that shareholders must elect positively in order to receive shares instead of cash; and

      2. (ii)

         includes a statement that the right is non-transferable.

2. (2)

   Any timetable set out in the circular must have been approved by the RIE on which the company's equity securities are traded.

1. (1)

   A circular relating to any proposal where shareholders are entitled to complete a mandate in order to receive shares instead of future cash dividends must include:

   1. (a)

      the information in LR 13.8.6R (1)(d) and (f)1;

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   2. (b)

      the basis of the calculation of the number of shares to be offered instead of cash;

   3. (c)

      a statement of last date for lodging notice of participation or cancellation in order for that instruction to be valid for the next dividend;

   4. (d)

      details of when adjustment to the number of shares subject to the mandate will take place;

   5. (e)

      details of when cancellation of a mandate instruction will take place;

   6. (f)

      a statement of whether or not the mandate instruction must be in respect of a shareholder's entire holding;

   7. (g)

      the procedure for notifying shareholders of the details of each scrip dividend; and

   8. (h)

      a statement of the circumstances, if known, under which the directors may decide not to offer a scrip alternative in respect of any dividend.

2. (2)

   The timetable in the circular for each scrip alternative covered by a scrip dividend mandate plan must have been approved by the RIE on which the company's equity shares 5are traded.

1. (1)

   When holders of listed equity shares 5are sent a notice of meeting which includes any business, other than ordinary business at an annual general meeting, an explanatory circular must accompany the notice. If the other business is to be considered at or on the same day as an annual general meeting, the explanation may be incorporated in the directors' report.

2. (2)

   [deleted]9

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3. (3)

   A circular or other document convening an annual general meeting where only ordinary business is proposed does not need to comply with LR 13.3.1R (4), (5) and (6)1.

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A circular to shareholders about proposed amendments to the constitution must include:

1. (1)

   an explanation of the effect of the proposed amendments; and

2. (2)

   either the full terms of the proposed amendments, or a statement that the full terms will be available for inspection:

   1. (a)

      [deleted]10

   2. (b)

      at the place of the general meeting for at least 15 minutes before and during the meeting; and10

   3. (c)

      on the national storage mechanism from the date of sending the circular.10

A circular to shareholders about the approval of an employee's share scheme or long-term incentive scheme must:

1. (1)

   include either the full text of the scheme or a description of its principal terms;

2. (2)

   include, if directors of the listed company are trustees of the scheme, or have a direct or indirect interest in the trustees, details of the trusteeship or interest;

3. (3)

   state that the provisions (if any) relating to:

   1. (a)

      the persons to whom, or for whom, securities, cash or other benefits are provided under the scheme (the "participants");

   2. (b)

      limitations on the number or amount of the securities, cash or other benefits subject to the scheme;

   3. (c)

      the maximum entitlement for any one participant; and

   4. (d)

      the basis for determining a participant's entitlement to, and the terms of, securities, cash or other benefit to be provided and for the adjustment thereof (if any) if there is a capitalisation issue, rights issue or open offer, sub-division or consolidation of shares or reduction of capital or any other variation of capital;

   cannot be altered to the advantage of participants without the prior approval of shareholders in general meeting (except for minor amendments to benefit the administration of the scheme, to take account of a change in legislation or to obtain or maintain favourable tax, exchange control or regulatory treatment for participants in the scheme or for the company operating the scheme or for members of its group);

4. (4)

   state whether benefits under the scheme will be pensionable and, if so, the reasons for this; and

5. (5)

   if the scheme is not circulated to shareholders, include a statement that it will be available for inspection:

   1. (a)

      [deleted]10

   2. (b)

      at the place of the general meeting for at least 15 minutes before and during the meeting; and10

   3. (c)

      on the national storage mechanism from the date of sending the circular.10

The resolution contained in the notice of meeting accompanying the circular must refer either to:

1. (1)

   the scheme itself (if circulated to shareholders); or

2. (2)

   the summary of its principal terms included in the circular.

The resolution approving the adoption of an employees' share scheme or long-term incentive scheme may authorise the directors to establish further schemes based on any scheme which has previously been approved by shareholders but modified to take account of local tax, exchange control or securities laws in overseas territories, provided that any shares made available under such further schemes are treated as counting against any limits on individual or overall participation in the main scheme.

A circular to shareholders about proposed amendments to an employees' share scheme or a long-term incentive scheme must include:

1. (1)

   an explanation of the effect of the proposed amendments; and

2. (2)

   the full terms of the proposed amendments, or a statement that the full text of the scheme as amended will be available for inspection:10

   1. (a)

      at the place of the general meeting for at least 15 minutes before and during the meeting; and 10

   2. (b)

      on the national storage mechanism from the date of sending the circular.10

If shareholders' approval is required by LR 9.4.4 R, the circular to shareholders must include the following information:

1. (1)

   details of the persons to whom the options, warrants or rights are to be granted; and

2. (2)

   a summary of the principal terms of the options, warrants or rights.

1. (1)

   A circular to holders of listed securities convertible into shares reminding them of the times when conversion rights are exercisable must include:

   1. (a)

      the date of the last day for lodging conversion forms and the date of the expected sending of the certificates;

   2. (b)

      a statement of the market values for the securities on the first dealing day in each of the six months before the date of the circular and on the latest practicable date before sending the circular;

   3. (c)

      the basis of conversion in the form of a table setting out capital and income comparisons;

   4. (d)

      a brief explanation of the tax implications of conversion for holders resident for tax purposes in the United Kingdom;

   5. (e)

      if there is a trustee, or other representative, of the securities holders to be redeemed, a statement that the trustee, or other representative, has given its consent to the issue of the circular or stated that it has no objection to the resolution being put to a meeting of the securities holders;

   6. (f)

      reference to future opportunities to convert and whether the terms of conversion will be the same as or will differ from those available at present, or, if there are no such opportunities, disclosure of that fact;

   7. (g)

      reference to letters of indemnity, for example, if certificates have been lost;

   8. (h)

      if power exists to allot shares issued on conversion to another person, reference to forms of nomination; and

   9. (i)

      a statement as to whether holders exercising their rights of conversion will retain the next interest payment due on the securities.

2. (2)

   The circular must not contain specific advice as to whether or not to convert the securities.

8Where a listed company has a controlling shareholder, a circular to shareholders relating to the election or re-election of an independent director must include:

1. (1)

   details of any existing or previous relationship, transaction or arrangement the proposed independent director has or had with the listed company, its directors, any controlling shareholder or any associate of a controlling shareholder or a confirmation that there have been no such relationships, transactions or arrangements; and

2. (2)

   a description of:

   1. (a)

      why the listed company considers the proposed independent director will be an effective director;

   2. (b)

      how the listed company has determined that the proposed director is an independent director; and

   3. (c)

      the process followed by the listed company for the selection of the proposed independent director.

8In relation to a listed company which did not previously have a controlling shareholder, LR 13.8.17 R does not apply to a circular sent to shareholders within a period of 3 months from the event that resulted in a person becoming a controlling shareholder of the listed company.