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.

8A "controlling shareholder" means any person who exercises or controls on their own or together with any person with whom they are acting in concert, 30% or more of the votes able to be cast on all or substantially all matters at general meetings of the company. For the purposes of calculating voting rights, the following voting rights are to be disregarded:

1. (1)

   any voting rights which such a person exercises (or controls the exercise of) independently in its capacity as bare trustee, investment manager, collective investment undertaking or a long-term insurer in respect of its linked long-term business if no associate of that person interferes by giving direct or indirect instructions, or in any other way, in the exercise of such voting rights (except to the extent any such person confers or collaborates with such an associate which also acts in its capacity as investment manager, collective investment undertaking or long-term insurer); or

2. (2)

   any voting rights which a person may hold (or control the exercise of) solely in relation to the direct performance, by way of business, of:

   1. (a)

      underwriting the issue or sale of securities; or

   2. (b)

      placing securities, where the person provides a firm commitment to acquire any securities which it does not place; or

   3. (c)

      acquiring securities from existing shareholders or the issuer pursuant to an agreement to procure third-party purchases of securities;

   and where the conditions below are satisfied:

   1. (i)

      the activities set out in (2)(a) to (c) are performed in the ordinary course of business;

   2. (ii)

      the securities to which the voting rights attach are held for a consecutive period of 5 trading days or less, beginning with the first trading day on which the securities are held;

   3. (iii)

      the voting rights are not exercised within the period the securities are held; and

   4. (iv)

      no attempt is made directly or indirectly by the person to intervene in (or attempt to intervene in) or exert (or attempt to exert) influence on the management of the issuer within the period the securities are held.

1. (1)

   A new applicant for the admission of equity shares4 to a premium listing4 must have published or filed historical financial information7 that:

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   1. (a)

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

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   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

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   3. (c)

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

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   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

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   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

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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

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   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 the earlier of:9

   9
   1. (a)

      the date in LR 6.1.3R (1)(b); or9

   2. (b)

      the date of acquisition by the new applicant;9

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 it will be carrying on an independent business as its main activity.8

8Where a new applicant for the admission of equity shares to a premium listing will have a controlling shareholder upon admission, it must have in place:

1. (1)

   a written and legally binding agreement which is intended to ensure that the controlling shareholder complies with the independence provisions set out in LR 6.1.4D R; and

2. (2)

   a constitution that allows the election and re-election of independent directors to be conducted in accordance with the election provisions set out in LR 9.2.2E R and LR 9.2.2F R.

8In order to comply with LR 6.1.4BR (1), where a new applicant will have more than one controlling shareholder, the new applicant will not be required to enter into a separate agreement with each controlling shareholder if:

1. (1)

   the new applicant reasonably considers, in light of its understanding of the relationship between the relevant controlling shareholders, that a controlling shareholder can procure the compliance of another controlling shareholder and that controlling shareholder'sassociates with the independence provisions contained in the relevant agreement; and

2. (2)

   the agreement, which contains the independence provisions set out in LR 6.1.4D R, entered into with the relevant controlling shareholder also contains:

   1. (a)

      a provision in which the controlling shareholder agrees to procure the compliance of a non-signing controlling shareholder and its associates with the independence provisions contained within the agreement; and

   2. (b)

      the names of any such non-signing controlling shareholder.

8The independence provisions referred to in LR 6.1.4BR (1) are undertakings that:

1. (1)

   transactions and arrangements with the controlling shareholder (and/or any of its associates) will be conducted at arm’s length and on normal commercial terms;

2. (2)

   neither the controlling shareholder nor any of its associates will take any action that would have the effect of preventing the new applicant or listed company from complying with its obligations under the listing rules; and

3. (3)

   neither the controlling shareholder nor any of its associates will propose or procure the proposal of a shareholder resolution which is intended or appears to be intended to circumvent the proper application of the listing rules.

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

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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

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Where LR 6.1.8 R applies,8LR 6.1.3BR (1)7 does8 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

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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

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Where LR 6.1.11 R applies, an8applicant 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 R7 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 FCA 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:

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   1. (a)

      held, directly or indirectly by:8

      8
      1. (i)

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

      2. (ii)

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

      3. (iii)

         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. (iv)

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

      5. (v)

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

   2. (b)

      subject to a lock-up period of more than 180 calendar days.8

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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 FCA will not admitshares 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 FCA 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 FCA 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'sgroup, 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'sgroup.

8A new applicant must satisfy the FCA that its constitution will allow it to comply with LR 9.2.21 R.