1This chapter applies to a company that has a listing of equity shares in the equity shares (commercial companies) category.

1In UKLR, a transaction is classified as a significant transaction where any percentage ratio is 25% or more.

1. (1)

   1In UKLR, a reverse takeover means a transaction consisting of an acquisition of a business, a company or assets:

   1. (a)

      where any percentage ratio is 100% or more; or

   2. (b)

      which in substance results in a fundamental change in the business or in a change in board or voting control of the issuer.

2. (2)

   Paragraph (1) applies whether such acquisition is effected:

   1. (a)

      by way of a direct acquisition by the issuer or a subsidiary;

   2. (b)

      by way of the issuer introducing a new holding company to its corporate structure and then carrying out the acquisition through the new holding company; or

   3. (c)

      in any other way.

1In this chapter (except where specifically provided to the contrary) a reference to a transaction by a listed company:

1. (1)

   includes:

   1. (a)

      (subject to paragraph (2)(a) to (g)) all agreements (including amendments to agreements) entered into by the listed company or its subsidiary undertakings;

   2. (b)

      the grant or acquisition of an option as if the option had been exercised, except that, if exercise is solely at the listed company’s or subsidiary undertaking’s discretion, the transaction will be classified on exercise and only the consideration (if any) for the option will be classified on the grant or acquisition; and

   3. (c)

      joint venture arrangements; and

2. (2)

   excludes:

   1. (a)

      a transaction in the ordinary course of business;

   2. (b)

      an issue of securities, or a transaction to raise finance, which does not involve the acquisition or disposal of any fixed asset of the listed company or of its subsidiary undertakings;

   3. (c)

      any transaction between the listed company and its wholly owned subsidiary undertaking or between its wholly owned subsidiary undertakings;

   4. (d)

      a break fee arrangement;

   5. (e)

      an indemnity or similar arrangement, except where the agreement or arrangement meets the conditions set out in UKLR 7.4.1R(1);

   6. (f)

      an issue of equity shares by a major subsidiary undertaking of a listed company, except where the issue meets the conditions set out in UKLR 7.4.4R; and

   7. (g)

      a transaction where the listed company purchases its own equity shares.

1For the purposes of UKLR 7.1.6R(2)(a), a transaction in the ordinary course of business excludes a reverse takeover.

1A listed company must appoint a sponsor where it proposes to make a request to the FCA to modify, waive or substitute the operation of UKLR 7.

1A listed company must appoint a sponsor where it proposes to make a request to the FCA for individual guidance in relation to the listing rules, the disclosure requirements or the transparency rules in connection with a matter referred to in UKLR 7.

1If a listed company is proposing to enter into a transaction which – due to its size or nature – could amount to a reverse takeover, it must obtain the guidance of a sponsor to assess the application of the listing rules, the disclosure requirements and the transparency rules.

1 UKLR 7 Annex 1 is modified as follows in relation to acquisitions or disposals of property by a listed property company:

1. (1)

   for the purposes of paragraph 2R(1) (the gross assets test), the assets test is calculated by dividing the transaction consideration by the gross assets of the listed property company and paragraphs 2R(5) and 2R(6) do not apply;

2. (2)

   for the purposes of paragraph 2R(1) (the gross assets test), if the transaction is an acquisition of land to be developed, the assets test is calculated by dividing the transaction consideration and any financial commitments relating to the development by the gross assets of the listed property company and paragraphs 2R(5) and 2R(6) do not apply;

3. (3)

   for the purposes of paragraph 2R(2), the gross assets of a listed property company are, at the option of the company:

   1. (a)

      the aggregate of the company’s share capital and reserves (excluding minority interests);

   2. (b)

      the book value of the company’s properties (excluding those properties classified as current assets in the latest published annual report and accounts); or

   3. (c)

      the published valuation of the company’s properties (excluding those properties classified as current assets in the latest published annual report and accounts);

4. (4)

   paragraph 4R(1) (the consideration test) does not apply but instead the test in UKLR 7.2.4R applies; and

5. (5)

   paragraph 6R(1) (the gross capital test) applies to disposals as well as acquisitions of property.

1. (1)

   1In addition to the tests in UKLR 7 Annex 1, if the transaction is an acquisition of property by a listed property company and any of the consideration is in the equity shares of that company, the listed company must determine the percentage ratios that result from the calculations under the test in (2).

2. (2)

   The share capital test is calculated by dividing the number of consideration shares to be issued by the number of equity shares in issue (excluding treasury shares).

1. (1)

   1In addition to the tests in UKLR 7 Annex 1, a listed property company must determine the percentage ratios that result from the calculation under the test in (2).

2. (2)

   The net annual rent test is calculated by dividing the net annual rent attributable to the assets the subject of the transaction by the net annual rent of the listed company.

3. (3)

   For the purposes of calculating the net annual rent test, except as otherwise stated in (4) to (7), figures used to classify net annual rent must be the figures shown in the latest published audited consolidated accounts or, if a listed company has, or will have, published a preliminary statement of later annual results at the time the terms of a transaction are agreed, the figures shown in that preliminary statement.

4. (4)
   1. (a)

      The figures of the listed company must be adjusted to take account of transactions completed during the period to which the figures referred to in (3) relate, and subsequent completed transactions where any percentage ratio was 5% or more at the time the terms of the relevant transaction were agreed.

   2. (b)

      The figures of the target company or business must be adjusted to take account of transactions completed during the period to which the figures referred to in (3) relate, and subsequent completed transactions where any percentage ratio would have been 5% or more at the time the terms of the relevant transaction were agreed when classified against the target as a whole.

5. (5)

   Figures on which the auditors are unable to report without modification must be disregarded.

6. (6)

   The principles in (3) to (5) also apply (to the extent relevant) to calculating the net annual rent of the target company or business.

7. (7)

   The FCA may modify (5) in appropriate cases to permit figures to be taken into account.

1. (1)

   In addition to the tests in UKLR 7 Annex 1, a listed mineral company undertaking a transaction involving significant mineral resources or rights to significant mineral resources must determine the percentage ratios that result from the calculations under the test in paragraph (2).

2. (2)

   The reserves test is calculated by dividing the volume or amount of the proven reserves and probable reserves to be acquired or disposed of by the volume or amount of the aggregate proven reserves and probable reserves of the mineral company making the acquisition or disposal.

1When calculating the size of a transaction under UKLR 7 Annex 1 and UKLR 7.2.6R(2), account must be taken of any associated transactions or loans effected or intended to be effected, and any contingent liabilities or commitments.

1When classifying a joint venture under UKLR 7, a listed company must classify both sides to a joint venture, so that both the disposal into the joint venture and the acquisition of an interest in the joint venture are classified. The 2 sets of class tests must not be aggregated and the highest result from the class tests will determine the overall classification of the transaction.

1. (1)

   1Subject to paragraph (2), transactions completed during the 12 months before the date of the latest transaction must be aggregated with that transaction for the purposes of classification as a significant transaction if:

   1. (a)

      they are entered into by the company with the same person or with persons connected with one another;

   2. (b)

      they involve the acquisition or disposal of securities or an interest in one particular company; or

   3. (c)

      together they lead to substantial involvement in a business activity which did not previously form a significant part of the company’s principal activities.

2. (2)

   Transactions completed during the 12-month period in (1) are not required to be aggregated with the latest transaction if they have previously been classified as a significant transaction (either individually or collectively).

1If under UKLR 7.2.11R any of the aggregated percentage ratios is 25% or more, the aggregated transactions will be classified as a significant transaction, in which case the listed company must comply with the requirements in UKLR 7.3 (Significant transactions) in respect of the aggregated transactions, modified as follows:

1. (1)

   Where the aggregated transactions involve the acquisition or disposal of securities or an interest in one particular company, the requirements in UKLR 7.3 apply to the transactions as a whole.

2. (2)

   If (1) does not apply, the requirements in UKLR 7.3 apply:

   1. (a)

      to each individual transaction that has been aggregated where any percentage ratio for the individual transaction is 5% or more; or

   2. (b)

      if there are no such individual transactions, to the one that led to the relevant aggregated percentage ratio reaching or exceeding 25%.

1. (1)

   1Subject to paragraph (2), transactions completed during the 12 months before the date of the latest transaction must be aggregated with that transaction for the purposes of classification as a reverse takeover if:

   1. (a)

      they are entered into by the company with the same person or with persons connected with one another;

   2. (b)

      they involve the acquisition or disposal of securities or an interest in one particular company; or

   3. (c)

      together they lead to substantial involvement in a business activity which did not previously form a significant part of the company’s principal activities.

2. (2)

   Transactions completed during the 12-month period in (1) are not required to be aggregated with the latest transaction if they have previously been classified as a reverse takeover (either individually or collectively).

1If under UKLR 7.2.15R the aggregation of transactions results in a reverse takeover, the listed company must comply with the requirements in UKLR 7.5 (Reverse takeovers) in respect of the aggregated transactions as a whole but the requirement for shareholder approval applies only to the latest transaction.

1. (1)

   1A listed company must notify a RIS as soon as possible after the terms of a significant transaction are agreed.

2. (2)

   The notification must:

   1. (a)

      state why the transaction is notifiable under UKLR 71;

   2. (b)

      contain an overview of the transaction and the company’s reasons for entering into it, which includes the information required by UKLR 7 Annex 2 Part 1 (Information relating to the transaction); and

   3. (c)

      include any further information the company considers relevant, having regard to the purpose of this chapter set out in UKLR 7.1.2G.

1. (1)

   1A listed company must notify a RIS as soon as possible after:

   1. (a)

      the terms of a significant transaction are agreed; and

   2. (b)

      the information in (2) has been prepared or the listed company becomes, or ought reasonably to have become, aware of the information,

   and in any event by no later than the completion of the transaction.

2. (2)

   The notification must include:

   1. (a)

      for a disposal, the information required by UKLR 7 Annex 2 Part 2 (Disposals – financial information); and

   2. (b)

      for all transactions, the information required by UKLR 7 Annex 2 Part 3 (Non-financial information).

1. (1)

   1A listed company must notify a RIS as soon as possible after the completion of the significant transaction.

2. (2)

   The notification must state that:

   1. (a)

      completion of the transaction has taken place; and

   2. (b)

      except as disclosed, there has been no material change affecting any matter contained in a notification under UKLR 7.3.1R or UKLR 7.3.2R.

3. (3)

   In (2)(b), ‘material’ has the meaning in UKLR 7.3.14R.

1. (1)

   1Where a listed company includes details of estimated synergies or other quantified estimated financial benefits expected to arise from a significant transaction in a notification required by UKLR 7.3.1R, UKLR 7.3.2R or UKLR 7.3.3R, the notification must include the information required by UKLR 7 Annex 2 Part 4.1 (Synergy benefits).

2. (2)

   Where a listed company includes financial information (including the information required by UKLR 7 Annex 2 Part 2) in a notification required by UKLR 7.3.1R, UKLR 7.3.2R or UKLR 7.3.3R, the notification must include the information required by UKLR 7 Annex 2 Part 4.2 to 4.4 (Sources of information).

3. (3)

   Where a listed company includes pro forma financial information in a notification required by UKLR 7.3.1R, UKLR 7.3.2R or UKLR 7.3.3R, the notification must include the information required by UKLR 7 Annex 2 Part 4.5 (Pro forma financial information).

1Information may be incorporated in a notification made by a listed company under UKLR 7.3.2R by reference to relevant information contained in:

1. (1)

   an approved prospectus or listing particulars of that listed company; or

2. (2)

   any other published document of that listed company that has been filed with the FCA.

1Where a notification made by a listed company under UKLR 7.3.1R, UKLR 7.3.2R or UKLR 7.3.3R includes information in accordance with UKLR 7.3.4R, that information may be incorporated in such notification by reference to relevant information contained in:

1. (1)

   an approved prospectus or listing particulars of that listed company; or

2. (2)

   any other published document of that listed company that has been filed with the FCA.

1Information incorporated by reference must be the latest available to the listed company.

1Information required by UKLR 7.3.1R and UKLR 7.3.3R must not be incorporated by reference to information contained in another document.

1When information is incorporated by reference, a cross-reference list must be provided in the notification to enable security holders to easily identify specific items of information. The cross-reference list must specify where the information can be accessed by security holders.

1A request to the FCA to authorise the omission of specific information in a particular case must:

1. (1)

   be made in writing by the listed company;

2. (2)

   identify the specific information concerned and the specific reasons for the omission; and

3. (3)

   state why, in the listed company’s opinion, one or more grounds in UKLR 7.3.11G apply.

1. (1)

   1A listed company must notify a RIS as soon as possible if, after the notification under UKLR 7.3.1R or UKLR 7.3.2R and before completion of the transaction:

   1. (a)

      it becomes aware that there has been a material change affecting any matter contained in that earlier notification;

   2. (b)

      it becomes aware that a material new matter has arisen which would have been required to be mentioned in that earlier notification if it had arisen at the time of the preparation of that notification;

   3. (c)

      it has agreed a material change to the terms of the transaction; or

   4. (d)

      it has agreed the terms of one or more further transactions that are of a type referred to in UKLR 7.2.11R(1)(a), (b) or (c) and are material but are not a significant transaction in their own right (individually or together).

2. (2)

   The supplementary notification in (1)(a), (b) or (c) must:

   1. (a)

      give details of the change or new matter; and

   2. (b)

      contain a statement that, except as disclosed:

      1. (i)

         there has been no material change affecting any matter contained in the earlier notification; and

      2. (ii)

         no other material new matter has arisen which would have been required to be mentioned in that earlier notification if it had arisen at the time of the preparation of that notification.

3. (3)

   The supplementary notification in (1)(d) must include the information set out in UKLR 7 Annex 2 Part 1 (Information relating to the transaction) in relation to the further transaction or transactions.

1In UKLR 7.3.13R, ‘material’ means material for the purpose of making an informed assessment of the assets and liabilities, financial position, profits and losses and prospects of the listed company and the rights attaching to any securities forming part of the consideration. It includes:

1. (1)

   a change in the terms of the transaction that increases any of the percentage ratios by 10% or more; and

2. (2)

   where the further transaction or transactions referred to in UKLR 7.3.13R(1)(d) would, if they were aggregated with the transaction or aggregated transactions (as applicable), result in an increase of any of the percentage ratios by 10% or more.

1. (1)

   1Where a listed company proposes to enter into any agreement or arrangement with a party (other than a wholly owned subsidiary undertaking of the listed company):

   1. (a)

      under which a listed company agrees to discharge any liabilities for costs, expenses, commissions or losses incurred by or on behalf of that party, whether or not on a contingent basis;

   2. (b)

      which is exceptional; and

   3. (c)

      under which the maximum liability is either unlimited, or is equal to or exceeds an amount equal to 25% of the average of the listed company’s profits for the last 3 financial years (using the figures shown in the audited consolidated accounts or preliminary statement of later annual results published before the terms are agreed, with losses taken as nil profit and included in the average),

   a listed company must notify a RIS as soon as possible after the terms of any agreement or arrangement have been agreed.

2. (2)

   The notification under (1) must comply with the requirements in UKLR 7.3 (Significant transactions) as applicable.

3. (3)

   Paragraph (1) does not apply to a break fee arrangement.

4. (4)

   In (1)(c), ‘profits’ means profits after deducting all charges except taxation.

1If:

1. (1)

   a major subsidiary undertaking of a listed company issues equity shares for cash or in exchange for other securities or to reduce indebtedness;

2. (2)

   the issue would dilute the listed company’s percentage interest in the major subsidiary undertaking; and

3. (3)

   the economic effect of the dilution is equivalent to a disposal of 25% or more of the aggregate of the gross assets or profits (after the deduction of all charges except taxation) of the group,

a listed company must notify a RIS as soon as possible after the terms of the issue have been agreed.

1The notification required in UKLR 7.4.4R must comply with the requirements set out in UKLR 7.3 (Significant transactions) as applicable.

1An issuer must, in relation to a reverse takeover:

1. (1)

   comply with the requirements of UKLR 7.3 other than UKLR 7.3.2R for the reverse takeover;

2. (2)

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

3. (3)

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

1If, after obtaining shareholder approval but before the completion of a reverse takeover, there is a material change to the terms of the transaction, the listed company must comply again separately with UKLR 7.5.1R in relation to the transaction.

1. (1)

   1If a listed company becomes aware of a matter described in (2) after the publication of a reverse takeover circular, 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 listed company is required to have disclosed in a reverse takeover circular; or

   2. (b)

      a material new matter which the listed company would have been required to disclose in the reverse takeover circular if it had arisen at the time of its publication.

3. (3)

   The listed company must have regard to UKLR 10.3.1R(3) when considering the materiality of any change or new matter under UKLR 7.5.5R(2).

1Where the issuer’s listing is cancelled following completion of a reverse takeover, the issuer must re-apply for the listing of the shares.

1A sponsor must contact the FCA on behalf of an issuer as early as possible:

1. (1)

   before a reverse takeover which has been agreed or is in contemplation is announced; or

2. (2)

   where details of the reverse takeover have leaked,

to discuss whether a cancellation of the issuer’s listing is appropriate on completion of the reverse takeover.