In my previous post, I detailed the considerations applying to companies proposing to issue shares. The following is a very brief overview of the main rules and guidelines that must be considered in addition to the considerations discussed previously, by public/listed companies proposing to issue shares.
Listing, Prospectus, Disclosure and Transparency Rules (‘LPDT Rules’)
The LPDT Rules apply to listed companies (and some of the rules apply to companies applying for listing) and their provisions set out not only procedures for listing but also continuing obligations to which the listed company and its directors are subject from the date of listing. The LPDT Rules need to be considered when a listed company is considering a fresh issue of shares.
Share Capital Management Guidelines (‘SCM Guidelines’) and Pre-emption Group Statement of Principles
Companies will also have regard to (i) the SCM guidelines issued by The Investment Association (formerly known as The Investment Management Association) in relation to the appropriate level of directors’ authority to allot shares, and (ii) the statement of principles issued by the Pre-emption Group, which is made up of representatives from listed companies and their investors in relation to the disapplication of pre-emption rights. A listed company must consider all of these guidelines whenever seeking s.551 CA 2006 authority or the disapplication of pre-emption rights under s.570 CA 2006. Although the guidelines do not have force of law, the effective sanction for non-compliance is that institutional investors may sell their shares or vote the resolution down.
Valuation of non-cash consideration
Under s.593 CA 2006, subject to certain exceptions, a public company cannot receive non-cash consideration on the allotment of shares without ensuring that the consideration has been independently valued, and a report on that valuation produced, in accordance with the provisions of CA 2006 (see in particular s.596 CA 2006 which sets out what the report should cover). Note that this section of CA 2006 applies to all public companies, not just listed companies.