Stock Exchange
There are various reasons why a company may decide to secure a quotation for its shares on the Stock Market. It could be to enable the company to raise large amounts of capital or to enable the promoters to realise capital, but in any event the company will render itself subject to the Listing Rules. These were formerly known as the Listing Rules of the London Stock Exchange (the "Yellow Book"). From 1 May 2000, however, the role of UK Listing Authority has transferred to the Financial Services Authority, although the Stock Exchange remains responsible for the admission of securities to trading.
The Listing Rules contain a comprehensive code of regulations that govern admission of securities to listing, the continuing obligations of issuers, the enforcement of these obligations and suspension and cancellation of listing. There are also a number of provisions relative to specific types of entity, such as overseas companies and venture capital trusts, and of security, eg eurobonds.
Peterkins is experienced in Stock Exchange work. As well as dealing with compliance and continuing obligations, we have advised clients in relation to the following transactions:
- reverse take-over of a listed company
- Class 1 disposal
- placing and open offer
- introduction
Verification
The UK Listing Authority does not itself investigate or verify the accuracy or completeness of listing particulars, nor does it check the sources to verify the information. In general the following parties will be responsible under the Financial Services Act for the accuracy and completeness of the document:
- the issuer of the securities, i.e. the listed company
- the directors of the issuer
- any person who has agreed to be named as a director of the issuer or who has agreed to become a director of the issuer
- any person who accepts, and is stated in the document as accepting responsibility for any part of the document
- any other person who has authorised any part of the contents of the document
Several penalties, both criminal, and civil, apply to any breach. "Verification" is the process by which statements in the document are checked to ensure that they are accurate and that no material information is omitted. Although the process of verification has no legal significance, it should enable the parties concerned to avoid a mis-statement or omission, or at least provide a defence to a claim under the Financial Services Act.
Typically, "verification notes" are prepared, containing each material statement in the document, the parties who are responsible for checking the statement, the supporting evidence, and the fact that the statement has been checked. The intention is to separate out each individual statement and consider it objectively in isolation. This process will often cause a (seemingly innocent) statement to be modified or even removed from the document altogether!
As well as verifying the statements contained in the documents, there is often a need to check the underlying information about the operations of the company concerned. Examples include the question of title to assets such as land and buildings, the adequacy of insurance, and the terms and conditions of major contracts.
Rapid responses
Strict deadlines are imposed for the submission of information under the Listing Rules. For example, a listed company is required to notify the Company Announcements Office of the Stock Exchange (as the "information dissemination provider" approved by the UK Listing Authority) of any information that is disclosed to the company in relation to the dealing of its directors in the listed securities of the company. Such notifications must be made "without delay (by the end of the business day following the receipt of the information by the company)".
Market sensitivity
In disclosing information to the Company Announcements Office of the Stock Exchange, it should be borne in mind that the information will, or may be, released by the Exchange to the market immediately, subject to the overriding obligations of accuracy and completeness. Therefore, the information should be expressed in such a way that it does not appear to contradict information previously made available to the market, or raise further unanswered questions in the minds of the investors or analysts.
In many cases, it will be appropriate for the lawyer involved to allow the company's stockbrokers and merchant bankers to review a draft of any proposed release or notification, in order to assess the likely market response.
Where, in the context of any particular situation the Listing Rules are unclear, a direct approach should be made to the UK Listing Authority for assistance.
Contact Aberdeen Office |
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| Tom Rennie | 01224 428000 |  |
Contact Inverurie Office |
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Graham Matthews |
01467 672800 | |
Contact Huntly Office |
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| Alexander Mitchell | 01466 792101 | |
Contact Keith Office |
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| Alexander Mitchell | 01542 882537 | |
Contact Alford Office |
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| Linda Purkis | 019755 62939 | |