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UKLR 5.4 Constitutional arrangements

UKLR 5.4.1R

1An applicant must have in place a constitution that allows it to comply with the listing rules – in particular:

  1. (1)

    UKLR 6.2.27R to vote on matters that must be decided by a resolution of the holders of the listed company’s equity shares that have been admitted to the equity shares (commercial companies) category; and

  2. (2)

    for an applicant with a controlling shareholder, UKLR 6.2.8R and UKLR 6.2.9R concerning the election and re-election of independent directors.

UKLR 5.4.2R

1An applicant must have in place a constitution which ensures that all equity shares in a class that has been admitted to the equity shares (commercial companies) category carry an equal number of votes on any shareholder vote.

UKLR 5.4.3R

1Where the applicant will have more than one class of equity shares admitted to the equity shares (commercial companies) category, the aggregate voting rights of the equity shares in each class should be broadly proportionate to the relative interests of those classes in the equity of the listed company.

UKLR 5.4.4G

1In assessing whether the voting rights attaching to different classes of listed equity shares are proportionate for the purposes of UKLR 5.4.3R, the FCA will have regard to the following non-exhaustive list of factors:

  1. (1)

    the extent to which the rights of the classes differ other than their voting rights – for example, with regard to dividend rights or entitlement to any surplus capital on winding up;

  2. (2)

    the extent of dispersion and relative liquidity of the classes; and/or

  3. (3)

    the commercial rationale for the difference in the rights.

UKLR 5.4.5R

1Where the applicant will have specified weighted voting rights shares in issue following admission, the applicant must have in place, on the first occasion the applicant makes an application for the admission of equity shares to the equity shares (commercial companies) category, a constitution which ensures that all of the following conditions are met:

  1. (1)

    The specified weighted voting rights shares may only be issued to a person who, on the first occasion the applicant makes an application for the admission of equity shares to the equity shares (commercial companies) category, was:

    1. (a)

      a director of the applicant;

    2. (b)

      an investor in, or shareholder of, the applicant;

    3. (c)

      an employee of the applicant;

    4. (d)

      a person established for the sole benefit of, or solely owned and controlled by, a person specified in (a), (b) or (c); or

    5. (e)

      where the applicant is a sovereign controlled commercial company, a sovereign controlling shareholder.

  2. (2)
    1. (a)

      The voting rights attached to the specified weighted voting rights shares issued to a person specified in (b) in accordance with (1) may only count towards shareholder votes for a period of 10 years beginning with the date on which the issuer first had a class of shares admitted to listing.

    2. (b)

      A person specified for the purposes of (a) is an investor in, or shareholder of, the applicant which is not a natural person, except for:

      1. (i)

        a person established for the sole benefit of, or solely owned and controlled by, a person who is a natural person; and

      2. (ii)

        a sovereign controlling shareholder.

  3. (3)

    The voting rights attached to specified weighted voting rights shares issued in accordance with (1) may not be transferred except to a person established for the sole benefit of, or solely owned and controlled by, a person specified in (1)(a), (b) or (c) to whom such specified weighted voting rights shares were issued.

  4. (4)

    The holders of the specified weighted voting rights shares cannot exercise the voting rights attached to specified weighted voting rights shares on the shareholder votes referred to in UKLR 6.2.27R(1).

UKLR 5.4.6G

1UKLR 5.4.5R(1)(d) and UKLR 5.4.5R(3) are intended to enable specified weighted voting rights shares to be held or transferred for the purpose of obtaining or maintaining favourable treatment of the specified weighted voting rights shares, including to take account of local tax, exchange control or securities laws in overseas territories.

Pre-emption rights

UKLR 5.4.7R

1If the law of the country of its incorporation does not confer on shareholders rights which are at least equivalent to UKLR 9.2.1R, an overseas company applying for a listing in the equity shares (commercial companies) category must:

  1. (1)

    ensure that its constitution provides for rights which are at least equivalent to the rights provided in UKLR 9.2.1R (as qualified by UKLR 9.2.2R); and

  2. (2)

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