Once a company becomes listed it is subject to further regulation and the directors of a listed company become far more accountable to the company’s shareholders than those of a private company. The obligations that a company must comply with once its shares are listed are known as ‘continuing obligations’. Continuing obligations are imposed on listed companies to protect parties investing in or affected by the operations of the relevant listed company. A listed company must comply with its continuing obligations at all times.
The aim of the rules relating to continuing obligations is to ensure:
- timely and accurate disclosure of all relevant information to shareholders;
- equal treatment of all shareholders and protection of existing shareholders; and
- the maintenance of an orderly market in shares.
The rules achieve these aims by three methods:
- the disclosure of certain information to the market and to shareholders of a listed company;
- the approval of a listed company’s shareholders before key transactions are entered into by the listed company; and
- regulating (and in certain cases requiring FCA approval of) the information sent to shareholders.
Certain transactions involving listed companies cannot be carried out by the board without the company first having satisfied certain requirements.
These rules relate to two different types of transactions:
- transactions classified by size; and
- transactions with related parties.
The aim of the controls is to keep shareholders informed of relevant transactions and to give them a right to object to large or sensitive transactions.