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UKLR 11.5 Transactions

Significant transactions

UKLR 11.5.1R

1A closed-ended investment fund must comply with UKLR 7 (Equity shares (commercial companies): significant transactions and reverse takeovers), except in relation to transactions that are executed in accordance with the scope of its published investment policy.

Transactions with related parties

UKLR 11.5.2R

1UKLR 8 (Equity shares (commercial companies): related party transactions) applies to a closed-ended investment fund, subject to the modifications and additional requirements set out in this section.

UKLR 11.5.3R

1In addition to the definition in UKLR 8.1.11R, a related party includes any investment manager of the closed-ended investment fund and any member of such investment manager’s group.

Relevant related party transactions

UKLR 11.5.4R
  1. (1)

    1The requirements in UKLR 8.2.1R(1) to (4) and UKLR 8.2.2R to UKLR 8.2.8R apply where a closed-ended investment fund enters into a relevant related party transaction where any percentage ratio is greater than 0.25%.

  2. (2)

    1The requirements in UKLR 8.2.7R(2)(a) and (b) apply if any percentage ratio for aggregated relevant related party transactions is greater than 0.25%.

UKLR 11.5.5R

1If a closed-ended investment fund enters into a relevant related party transaction where any percentage ratio is 5% or more (or which is uncapped), the closed-ended investment fund must:

  1. (1)

    comply with the requirements of UKLR 8.2.1R(1) to (4) and UKLR 8.2.2R to UKLR 8.2.3R for the relevant related party transaction, except that the notification is not required to include the information required by:

    1. (a)

      UKLR 8.2.2R(4); or

    2. (b)

      UKLR 8.2.2R(5);

  2. (2)

    send a circular to its shareholders and obtain their prior approval in a general meeting for the transaction; and

  3. (3)

    ensure that any agreement effecting the transaction is conditional on that approval being obtained.

UKLR 11.5.6R
  1. (1)

    1The requirement to aggregate transactions or arrangements in UKLR 8.2.7R(1) applies to relevant related party transactions for the purposes of UKLR 11.5.5R, except that any transactions or arrangements which have been approved by shareholders are not required to be aggregated.

  2. (2)

    If under this rule aggregation of relevant related party transactions results in a requirement for shareholder approval, that approval is required only for the latest relevant related party transaction.

Additional exemption from related party requirements

UKLR 11.5.7R
  1. (1)

    1UKLR 8.2.1R to UKLR 8.2.8R and UKLR 11.5.4R to UKLR 11.5.6R do not apply to an arrangement between a closed-ended investment fund and its investment manager or any member of that investment manager’s group where the arrangement is such that each invests in or provides finance to an entity or asset and the investment or provision of finance is either:

    1. (a)

      made at the same time and on substantially the same economic and financial terms;

    2. (b)

      referred to in the closed-ended investment fund’s published investment policy; or

    3. (c)

      made in accordance with a pre-existing agreement between the closed-ended investment fund and its investment manager.

  2. (2)

    For the purposes of paragraph (1)(c), a pre-existing agreement is an agreement which was entered into at the time the investment manager was appointed.

Material change to terms of a relevant related party transaction

UKLR 11.5.8R

1If, after obtaining shareholder approval but before completion, there is a material change to the terms of a transaction subject to UKLR 11.5.5R, the closed-ended investment fund must comply again separately with UKLR 11.5.5R in relation to the transaction.

UKLR 11.5.9G

1The FCA would (among other things) generally consider an increase of 10% or more in the consideration payable to be a material change to the terms of the transaction.

Supplementary circular for relevant related party transaction

UKLR 11.5.10R
  1. (1)

    1If a closed-ended investment fund becomes aware of a matter described in (2) after the publication of a circular that seeks shareholder approval for a transaction expressly requiring a vote by UKLR 11.5.5R, but before the date of a general meeting, it must, as soon as practicable:

    1. (a)

      advise the FCA of the matters of which it has become aware; and

    2. (b)

      send a supplementary circular to holders of its listed equity shares, providing an explanation of the matters referred to in (2).

  2. (2)

    The matters referred to in (1) are:

    1. (a)

      a material change affecting any matter the closed-ended investment fund is required to have disclosed in a circular; or

    2. (b)

      a material new matter which the closed-ended investment fund would have been required to disclose in the circular if it had arisen at the time of its publication.

  3. (3)

    The closed-ended investment fund must have regard to UKLR 10.3.1R(3) when considering the materiality of any change or new matter under (2).

UKLR 11.5.11G

1The circular requirements in UKLR 11.6 apply to a supplementary circular under UKLR 11.5.10R. It may be necessary to adjourn a convened shareholder meeting if a supplementary circular cannot be sent to holders of listed equity shares at least 7 days prior to the convened shareholder meeting as required by UKLR 10.1.9R as applied by UKLR 11.6.

Sponsor requirements for transactions

UKLR 11.5.12R

1As set out in UKLR 4.2.1R, a closed-ended investment fund must appoint a sponsor on each occasion it:

  1. (1)

    is required to submit to the FCA a reverse takeover circular or a relevant related party transaction circular required by UKLR 11.5.5R; or

  2. (2)

    is required by UKLR 8.2.1R(3), including as modified by UKLR 11.5.4R, to provide a listed issuer with a confirmation that the terms of a proposed transaction or arrangement with a related party are fair and reasonable.