LR 6.1 Application

1This chapter applies to a new applicant7 for the admission of equity shares4 to premium listing (commercial company) except where LR 6.1.1A R applies7.43

7This chapter does not apply where a company with an existing premium listing of equity shares introduces a new holding company to its existing group and no transaction as defined in LR 10.1.3 R is being undertaken that would otherwise increase the assets or liabilities of the group.

1. (1)

   A new applicant for the admission of equity shares4 to a premium listing 4 must have published or filed historical financial information7 that:

   47
   1. (a)

      covers7 at least three years; [Note: article 44 CARD]

      7
   2. (b)

      has a latest balance sheet date that is7 not more than six months before the date of the prospectus or listing particulars for the relevant shares and not more than nine months before the date the shares are admitted to listing unless LR 5.6.21 R applies;7

      77
   3. (c)

      includes the7 consolidated accounts for the applicant and all its subsidiary undertakings;

      7
   4. (d)

      has been audited or reported on in accordance with the standards acceptable under item 20.1 of Annex I of the PD Regulation; and7

      7
   5. (e)

      is not subject to a modified report, except as set out in LR 6.1.3A G or LR 5.6.21 R.7

      7
2. (2)

   A new applicant must:

   1. (a)

      take all reasonable steps to ensure that the person providing the opinion pursuant to LR 6.1.3R (1)(e) and LR 6.1.3DR (3) is7 independent of it; and

      7
   2. (b)

      obtain written confirmation from the person providing the opinion pursuant to LR 6.1.3R (1)(e) and LR 6.1.3DR (3) that it complies with guidelines on independence issued or approved by its national accountancy or auditing bodies.7

      7

7The historical financial information required by LR 6.1.3R (1) must:

1. (1)

   represent at least 75% of the new applicant's business for the full period referred to in LR 6.1.3R (1)(a); and

2. (2)

   put prospective investors in a position to make an informed assessment of the business for which admission is sought.

7Where the new applicant has made an acquisition or series of acquisitions such that its own consolidated financial information is insufficient to meet the 75% requirement in LR 6.1.3B R, there must be historical financial information relating to the acquired entity or entities which has been published or filed and that:

1. (1)

   covers the period from at least three years prior to the date under LR 6.1.3R (1)(b) up to at least the date of acquisition by the new applicant;

2. (2)

   is presented in a form that is consistent with the accounting policies adopted in the financial information required by LR 6.1.3 R;

3. (3)

   is not subject to a modified report, except as set out in LR 6.1.3A G; and

4. (4)

   in aggregate with its own historical financial information represents at least 75% of the enlarged new applicant's business for the full period referred to in LR 6.1.3R (1)(a).

A new applicant for the admission of equity shares4 to a premium listing4 must demonstrate that:

1. (1)

   [deleted]7

   7
2. (2)

   it controls the majority of its assets and has done so for at least the period referred to in LR 6.1.3R (1)(a)7; and

   7
3. (3)

   it will be carrying on an independent business as its main activity.

If a mineral company applies for the admission of its equity shares and cannot comply with LR 6.1.3R (1)(a) because it has been operating for a shorter period:7

1. (1)

   it must have published or filed historical financial information since the inception of its business; and7

   7
2. (2)

   LR 6.1.3R (1)(b) to (e) and (2) apply to the mineral company only with regard to the period for which it has published or filed historical financial information pursuant to (1).7

   7

LR 6.1.3BR (1) and 7LR 6.1.4 R do7 not apply to a mineral company that applies for the admission of its equity shares.4

1. (1)

   This rule applies to a mineral company that is a new applicant for the admission of its equity shares.4

   4
2. (2)

   If the mineral company does not hold controlling interests in a majority (by value) of the properties, fields, mines or other assets in which it has invested, it must demonstrate that it has a reasonable spread of direct interests in mineral resources and has rights to participate actively in their extraction, whether by voting or through other rights which give it influence in decisions over the timing and method of extraction of those resources.

If a scientific research based company applies for the admission of its equity shares to a premium listing and cannot comply with LR 6.1.3R (1)(a) because it has been operating for a shorter period:7

1. (1)

   it must have published or filed historical financial information since the inception of its business; and7

   7
2. (2)

   LR 6.1.3R (1)(b) to (e)and (2) apply to the scientific research based company only with regard to the period for which it has published or filed historical financial information under (1).7

   7

An applicant for the admission of equity shares4 to a premium listing7 of a scientific research based company does not need to satisfy LR 6.1.3B R or7 LR 6.1.4 R but must:

1. (1)

   demonstrate its ability to attract funds from sophisticated investors prior to the marketing at the time of listing7;

2. (2)

   intend to raise at least £10 million pursuant to a marketing at the time of listing;

3. (3)

   have a capitalisation, before the marketing at the time of listing, of at least £20 million (based on the issue price and excluding the value of any equity shares4 which have been issued in the six months before listing);

   4
4. (4)

   have as its primary reason for listing the raising of finance to bring identified products to a stage where they can generate significant revenues; and

5. (5)

   demonstrate that it has a three year record of operations in laboratory research and development including:

   1. (a)

      details of patents granted or details of progress of patent applications; and

   2. (b)

      the successful completion of, or the successful progression of, significant testing of the effectiveness of its products.

An applicant for the admission of shares must satisfy the FSA that it and its subsidiary undertakings (if any) have sufficient working capital available for the group's requirements for at least the next 12 months from the date of publication of the prospectus or listing particulars (as the case may be) for the shares that are being admitted.

1. (1)

   If an application is made for the admission of a class of shares, a sufficient number of shares of that class must, no later than the time of admission, be distributed to the public in one or more EEA States.

2. (2)

   For the purposes of paragraph (1), account may also be taken of holders in one or more states that are not EEA States, if the shares are listed in the state or states.

3. (3)

   For the purposes of paragraph (1), a sufficient number of shares will be taken to have been distributed to the public when 25% of the shares for which application for admission has been made are in public hands.

4. (4)

   For the purposes of paragraphs (1), (2) and (3), shares are not held in public hands if they are held, directly or indirectly by:

   1. (a)

      a director of the applicant or of any of its subsidiary undertakings; or

   2. (b)

      a person connected with a director of the applicant or of any of its subsidiary undertakings; or

   3. (c)

      the trustees of any employees' share scheme or pension fund established for the benefit of any directors and employees of the applicant and its subsidiary undertakings; or

   4. (d)

      any person who under any agreement has a right to nominate a person to the board of directors of the applicant; or

   5. (e)

      any person or persons in the same group or persons acting in concert 2who have an interest in 5% or more of the shares of the relevant class.

5. (5)

   For the purposes of paragraph (3), treasury shares are not to be taken into consideration when calculating the number of shares of the class. [Note: article 48 CARD]

The FSA will not admit shares of a company incorporated in a non-EEA State that are not listed either in its country of incorporation or in the country in which a majority of its shares are held, unless the FSA is satisfied that the absence of the listing is not due to the need to protect investors. [Note: article 51 CARD]

1. (1)

   The total of all issued warrants to subscribe for equity shares or options to subscribe for equity shares must not exceed 20% of the issued equity share capital (excluding treasury shares) of the applicant as at the time of issue of the warrants or options.

2. (2)

   Rights under employees' share schemes are not included for the purpose of the 20% limit in paragraph (1).

To be listed, the constitution of the company and the terms of its7 equity shares4 must be compatible with electronic settlement.7

6If the law of the country of its incorporation does not confer on shareholders rights which are at least equivalent to LR 9.3.11 R, an overseas company applying for a premium listing must:

1. (1)

   ensure its constitution provides for rights which are at least equivalent to the rights provided for in LR 9.3.11 R (as qualified by LR 9.3.12 R); and

2. (2)

   be satisfied that conferring such rights would not be incompatible with the law of the country of its incorporation.

5A company applying for the admission of equity shares to premium listing must satisfy the FSA that the discretion of its board to make strategic decisions on behalf of the company has not been limited or transferred to a person outside the issuer's group, and that the board has the capability to act on key strategic matters in the absence of a recommendation from a person outside the issuer's group.