International ECM Listings Rules, Requirements & Obligations in United Kingdom

(Unless expressly stated, the information in this section addresses a listing of equity shares in a commercial company (not an investment company) on the Premium Listing segment of London Stock Exchange.)

The Main Market is a UK regulated market, operated by the London Stock Exchange plc (LSE) of shares of companies whose shares have been admitted to listing on the Official List.  The Financial Conduct Authority (FCA) is the competent authority for the Official List (and in this capacity was historically referred to as the UK Listing Authority or UKLA). Technically, shares are admitted to listing on the Official List of the FCA and admitted to trading on the Main Market for listed securities of the LSE, meaning there are two applications to make, but the terms are often used interchangeably.

The Official List is made up of various categories including, but not limited to, equity shares (commercial companies),  closed-ended investment funds, open-ended investment companies, equity shares (shell companies), equity shares (international commercial companies secondary listing) and equity shares (transition).

The new UK Listing Rules (UKLR) came into effect on 29 July 2024 and replaced the previous listing rules, which applied to companies on the Official List. Commercial companies with equity shares admitted to trading on the Premium Listing segment under the previous listing rules were assigned to the equity shares (commercial companies) category and those on the Standard Listing segment under the previous listing rules were assigned to the equity shares (transition) category. 

The equity shares (transition) category is a closed category.  Commercial companies with equity shares that have been assigned to it can apply, and be assigned (subject to complying with the more onerous requirements), to the equity shares (commercial companies) category from 29 July 2024.

Issuers listed on the equity shares (commercial companies) category are expected to meet certain listing and corporate governance standards, including rules imposed by the FCA, MAR, the Transparency Directive and other directives (as brought into UK law following Brexit). Rules imposed by the FCA under the UKLR include requirements to appoint a sponsor (financial adviser) in certain circumstances; to ensure that, where new shares are issued for cash, they are offered first to existing shareholders in proportion to their holdings (i.e. pre-emption rights); to report on compliance with the UK Corporate Governance Code, to make announcements regarding certain transactions that are large in size compared to the issuer or that are with a related party; and to announce certain events, such as board changes.

Depositary receipts, options and warrants and investment funds can also be listed on the Official List but under different categories.  Such types of listing are beyond the scope of this guide.

In addition, there is a separate category for overseas companies that are already listed in another country and wish to have a secondary listing on the Main Market of the LSE. 

Public limited companies (plc) incorporated in the UK.

Any foreign company that has been duly incorporated in its place of incorporation or establishment and which is permitted under its local law to have its equity securities listed.

A prospectus prepared and approved by the FCA in accordance with the Prospectus Regulation is required for admission to listing on the Official List and admission to trading on a regulated market in the UK, such as the Main Market.  An exemption to this applies when the shares to be admitted are of the same class as those already admitted to trading on the relevant regulated market, provided such shares represent, in any 12 month period, less than 20 per cent. of the number of shares already admitted to trading on the same regulated market.

Note that a prospectus may also be required where there is an “offer to the public”, unless an applicable exemption is available, irrespective of whether admission to listing on a regulated market is being sought.

A minimum market capitalisation of £30 million is required for most types of issuer.  The FCA may reduce this requirement if it is satisfied that there will be an adequate market for the securities concerned.

An issuer must provide a working capital statement in its prospectus under the Prospectus Regulation on IPO.

At least 10% of the shares being admitted to the Official List must end up in the hands of the public by the time of admission – i.e. excluding shareholders with a 5% interest or more and persons who are connected to the issuer or its directors and excluding shares subject to a lock-up period of more than 180 calendar days.

There is no longer any requirement for a revenue earning track record or for a company to have an independent business or operational control over its main activities.

The UKLR no longer require an issuer to have a minimum of 3 years’ historical financial information and provide details on application.  However, where such information is available, it will need to be included in a prospectus under the Prospectus Regulation.

Shares admitted to the Official List must be freely transferable. The only time when restrictions can normally be imposed is if a shareholder refuses to tell the issuer who is interested in its shares or if restrictions are needed to prevent certain types of investor holding more than a specified percentage of the shares in certain regulated issuers.

If the issuer has a shareholder with an interest of 30% or more, it must be able to demonstrate that, despite having a controlling shareholder, it is able to carry on the business it carries on as its main activity independently from such controlling shareholder at all times.

Factors which may indicate that an issuer is not able to act independently of a controlling shareholder include where:

• the issuer has granted, or may be required to grant, security over its business in connection with the funding of a controlling shareholder or a member of the controlling shareholders’ group; or
• the issuer is unable to demonstrate that it has access to financing other than from a controlling shareholder or an associate of a controlling shareholder.

Where an issuer has a controlling shareholder, by its next annual general meeting (unless notice for the next annual general meeting has already been given or is given within 3 months from the issuer obtaining a controlling shareholder),  its constitution must require:

• any election or re-election of an independent director to be approved by the shareholders of the issuer and by the independent shareholders of the issuer i.e. other than the controlling shareholder; and
• if such a vote fails to pass, and the issuer wishes to re-propose an independent director for election, the issuer must propose a further resolution to elect or re-elect the independent director which:
  • must be voted on within 90 days of the original vote;
  • must be voted on within 30 days of the period set out in (a) above; and
  • must be approved by the shareholders of the issuer.

If an issuer has a controlling shareholder and the controlling shareholder, or any of its associates, proposes or procures the proposal of a shareholder resolution that a director considers is intended or appears to be intended to circumvent the proper application of the UKLR, the circular that accompanies the notice of meeting which contains the shareholder resolution must include a statement from the board of directors about the director’s opinion in respect of the resolution.

An issuer must at all times ensure that the discretion of the board to make strategic decisions on behalf of the company has not been limited or transferred to a person outside the issuer’s group (i.e. to external management) and that the board is capable to act on key strategic matters in the absence of a recommendation from a person outside the issuer’s group. 

These are not required by the UKLR, but in practice sponsors or underwriters to the issue normally require contractual lock-ins from management and major shareholders, in order to secure an orderly market for several months after an IPO.

The issuer must appoint one of the FCA’s approved sponsors to guide it through the listing process and confirm to the FCA that all the relevant requirements have been met.

A sponsor is also needed every time an issuer listed on the equity shares (commercial companies) category publishes a prospectus; in certain circumstances when a circular is required; when an issuer applies to transfer equity shares from the equity shares (transition) category to the equity shares (commercial companies) category; and in certain other circumstances.

No broker or market-maker is required to be appointed by the issuer but market expectation is for a broker to be appointed on an IPO.

Advertisements, presentations to potential investors and other means of promoting an IPO or secondary issue are generally permitted, subject to certain restrictions. Advertisements must be clearly labelled as such, must refer readers to the prospectus, and must be consistent with the prospectus. Other communications which invite or encourage any person to buy or subscribe for securities, or otherwise deal in any investment, can only be made if they are issued by, or first approved by, an appropriately authorised investment firm, or if a specific exemption applies. Professional investors are almost invariably exempt, so these restrictions are usually only of concern when an offer is being promoted to the wider public (e.g. in a retail IPO).

Reports published by analysts and brokers who are in some way connected to an investment bank that is sponsoring the issue are also subject to various controls. The research report must not be published earlier than seven days after the prospectus (or at least the registration document part of the prospectus) is issued (or if equal access has been given to unconnected analysts, this may be shortened to one business day).

Timing depends on the size and complexity of the issuer, and its state of preparedness for an IPO, but it will normally take at least three to four months 

When an issuer issues new shares for cash, shareholders should enjoy pre-emption rights. Holders of warrants to subscribe for new shares, and instruments that are convertible into shares, may also sometimes have contractual pre-emption rights.

Usually, shareholders approve a resolution at each annual general meeting that authorises:

1. in any year, up to 10% of the issuer’s share capital can be issued for cash non-pre-emptively (e.g. in a placing to new investors); and
2. an additional 10% can be issued for cash non-pre-emptively in connection with an acquisition or specified capital investment.

Any non-pre-emptive offer involving a greater percentage will usually need specific shareholder approval. Offers of shares that respect the pre-emption rights of existing shareholders (such as rights issues and open offers) can usually be implemented without the issuer needing to obtain specific shareholder approval.

The new shares will normally be of the same class as those already in issue and will be listed.

An issuer incorporated outside the UK must comply with the same eligibility requirements as a UK issuer unless it can demonstrate to the FCA that its local law prohibits it from doing so.

If the law of the country of its incorporation does not confer pre-emption rights on existing shareholders, a non-domestic issuer must ensure that such rights are included in its constitution (although shareholders may agree to disapply such rights to a specified extent or for a particular issue or issues of shares in the same way as UK issuers as mentioned above or in accordance with the laws of its country of incorporation).

An issuer incorporated outside the UK cannot have its shares admitted to the equity shares (commercial companies) category if the shares are not listed either in its country of incorporation or in the country in which a majority of its shares are held, unless the FCA is satisfied that the absence of such listing is not because of a wish to avoid obligations that would protect investors.

The prospectus will usually have to include a description of any material differences between the rights and responsibilities of shareholders under UK company law and under the issuer’s domestic law. In some cases, the issuer may need to add into its constitution provisions designed to give shareholders rights, similar to those they would enjoy under UK law.

Shares of an issuer incorporated outside the UK and Ireland cannot be admitted to the UK’s electronic trading and settlement system, CREST. Instead, overseas issuers can arrange for depositary interests representing their shares to be issued by Euroclear UK & Ireland and dematerialised for admission to CREST (CREST depositary interests or CDIs). CDIs are similar to depositary receipts.

Non-UK companies that are already listed on a non-UK securities exchange and wish to obtain a secondary listing on the Main Market of the LSE will need to comply with the requirements of the equity shares (international commercial companies secondary listing) category of the UKLR.

To have its equity shares admitted to the equity shares (international commercial companies secondary listing) category, a non-domestic issuer must appoint a registrar in the UK if either (i) 200 or more of its shareholders are or will be resident in the UK; or (ii) 10% or more of its shares are or will be held by persons resident in the UK.

1. English; and
2. following Brexit, passporting of an EU prospectus is no longer possible.

FCA: https://www.fca.org.uk/markets 

AIM (formerly known as the Alternative Investment Market) is the most important secondary market in the UK, which is operated and regulated by the London Stock Exchange plc (LSE). AIM is not a regulated market. As a result, provided that shares are not offered to the public (or, if they are, provided an exemption applies), no prospectus needs to be published or approved by the FCA, in relation to an application for admission to AIM. Usually, equity fundraisings by AIM issuers are effected by means of a placing with institutional investors, so that no prospectus is required. 

Public limited company (plc).

Any foreign company that has been duly incorporated in its place of incorporation or establishment and which is permitted under the law of its jurisdiction of incorporation or establishment to have its securities listed.

An admission document prepared in accordance with the AIM Rules for Companies, which contains the majority of (but not all) the information which would otherwise be required in a prospectus prepared under the Prospectus Regulation. Exemptions apply for issuers which are already listed on certain major stock exchanges.

Exceptionally, a prospectus prepared and approved in accordance with the Prospectus Regulation may be required where shares are being offered to the public e.g. in a retail offer, and none of the exemptions apply. The most commonly relied on exemptions for an AIM issuer issuing new shares are:

• offers to qualified investors (generally, professional investors and large organisations);
• offers to fewer than 150 persons;
• offers of less than €8 million (or its equivalent).

There are no minimum assets or equity requirements (though special rules apply to investment companies and mineral companies).

There are no other minimum requirements, although the LSE may impose special conditions as it sees fit and admission is at the LSE's (wide) discretion.

All issuers must have sufficient working capital for at least the 12 months following the IPO.

The AIM Rules do not specify a minimum proportion of shares that must be in public hands, but the LSE has discretion to impose a minimum if, for example, it is considered necessary to protect the orderly operation or reputation of AIM. Most AIM issuers have a minimum public float of at least 25%.

No track record is required, although note the lock-in requirements below.

Three years’ audited accounts (or such shorter period as the issuer has been in operation).

Shares must be freely transferable except that the issuer may limit the number of shareholders domiciled in a particular country, in order to ensure that it does not become subject to a particular statute or regulation.

Major shareholders and their influence will have to be disclosed in the admission document or, if the IPO involves an offer to the public, the prospectus. The issuer’s nominated adviser (Nomad) will usually require any shareholder with a holding of 20% or more to enter into a relationship agreement with the issuer to ensure it can act independently of such shareholder.

If the issuer’s main business has not been independent and earning revenue for at least two years, all directors, shareholders with 10% or more, and employees with 0.5% or more, of the issuer’s equity, and certain other persons connected to the issuer, must agree not to sell their shares for at least one year from admission.

The Nomad or broker will usually require lock-ins for all issuers from management and/or major shareholders in any event and regardless of the requirement in the rules.

An issuer must appoint and retain a qualified nominated adviser (Nomad) at all times. The Nomad is expected to assess an issuer’s suitability for AIM by carrying out full due diligence on its business and its directors, to guide the issuer through the admission process, and to confirm to the LSE that all the relevant requirements have been met. If the issuer is not making an offer to the public (i.e. requiring the publication of a prospectus), it must publish an admission document that is vetted by its Nomad on behalf of the LSE (and the Nomad is expected to take the lead on drafting the business parts of the admission document). Nomads effectively act as intermediaries between an issuer and the LSE, and ensure the issuer complies with the AIM Rules on the LSE's behalf.

No market-maker is required, but the issuer must retain a broker at all times (which may, and often will, be the same firm as its Nomad). If there is no registered market-maker in the issuer’s shares, the broker must use its best endeavours to find matching business.

All investors must be given the same information about the issuer and the offer. Advertisements, presentations to potential investors, and other means of promoting an IPO or secondary issue are generally permitted, subject to certain restrictions. In particular, any communication that invites or encourages any person to buy or subscribe for securities, or otherwise deal in any investment, can only be made if it is issued by, or first approved by, an appropriately authorised investment firm, or if a specific exemption applies. Professional investors almost invariably fall within an exemption, so these restrictions do not usually cause any difficulties for AIM issues.

Reports published by analysts and brokers who are in some way connected to the investment bank that is acting as Nomad and sponsoring the issue are also subject to various controls. The research report is normally published about one month before the admission document is published.

Timing will depend on the size and complexity of the issuer, and its state of preparedness for an IPO, but it will normally take at least two to three months.

When an issuer issues new shares for cash, shareholders should enjoy pre-emption rights. Holders of warrants to subscribe for new shares, and instruments that are convertible into shares, may also sometimes have contractual pre-emption rights. In the case of companies admitted to AIM, shareholders commonly approve a resolution at each annual general meeting authorising, in any year, up to 10% to 20% of the issuer's share capital to be issued non-pre-emptively (e.g. in a placing to new investors). Any non-pre-emptive offer involving a greater percentage will usually need specific shareholder approval. Offers of shares that respect the pre-emption rights of existing shareholders (such as rights issues and open offers) can usually be implemented without the issuer needing to obtain specific shareholder approval.

The new shares will normally be of the same class as those already in issue and must also be admitted to trading on AIM.

An issuer incorporated outside the UK must comply with the same eligibility requirements as a UK issuer.

If the law of the country of its incorporation does not confer pre-emption rights on existing shareholders, a non-domestic issuer would normally ensure that such rights are included in its constitution (although shareholders may agree to disapply such rights to a specified extent or for a particular issue or issues of shares).

The admission document will usually have to include a description of any material differences between the rights and responsibilities of shareholders under UK company law and under the issuer’s domestic law. In some cases, the issuer may need to add into its constitution provisions designed to give shareholders rights, similar to those they would enjoy under UK law.

Shares of an issuer incorporated outside the UK and Ireland cannot be admitted to the UK’s electronic trading and settlement system, CREST. Instead, overseas issuers can arrange for depositary interests representing their shares to be issued by Euroclear UK & Ireland and dematerialised for admission to CREST (CREST depositary interests or CDIs). CDIs are similar to depositary receipts.

Admission document:

1. English; and
2. passporting is not available for an admission document.

Prospectus (if required – which would be unusual):

1. English; and
2. following Brexit, passporting is not available. 

Every AIM issuer must establish and maintain a website displaying its most recent admission document and financial results for the last five years, all announcements made over the previous 12 months, its constitutional documents and certain other important information.

LSE: https://www.londonstockexchange.com/companies-and-advisors/aim/aim/aim.htm

(Unless expressly stated, the information in this section addresses a commercial company (not an investment company) having its equity shares listed on the Premium Listing segment of the London Stock Exchange.)

Regulated market.

Under the Listing Rules, the following matters require shareholder approval:

• major (Class 1) transactions (i.e. which broadly affect at least 25% of the group's gross assets, profits, gross capital or its market capitalisation);
• transactions with parties who are in some way "connected" to the issuer (e.g. directors, 10%+ shareholders, and their respective associates) (related party transactions);
• reverse takeovers (i.e. broadly, when the issuer acquires a business larger than itself);
• transfer of equity shares from the Premium Listing to the Standard Listing segment;
• certain employee share schemes and long-term incentive schemes. Subject to certain exceptions, shareholder approval is also required prior to the grant to a director or employee of an option or warrant over shares in the issuer if the price per share payable on exercise is less than market value;
• de-listing, other than following a takeover or restructuring;
• secondary issues (other than a rights issue) at a discount of more than 10%; and
• share buybacks.

Under UK company law, shareholder approval is required for, among other things:

• a change to the issuer's share capital or constitution;
• the payment of a final dividend; and
• issues of new shares for cash (see further below).

Issuers must report in their annual report and accounts on the extent to which they have complied during the year with the "UK Corporate Governance Code" published by the UK's Financial Reporting Council and endorsed by UK institutional shareholders and the FCA. This rule applies to all issuers: overseas issuers can no longer simply comply with the corporate governance code of their country of incorporation and explain any material differences from the UK Corporate Governance Code.

UK Domestic issuers invariably have a unitary board structure comprising both executive and non-executive directors. The UK Corporate Governance Code is primarily concerned with the responsibilities of non-executive directors, particularly their role in monitoring and constructively challenging the decisions of the executive directors.

Most issuers also comply with guidelines published by institutional investor bodies such as the Investment Association (IA) and the Pension and Lifetime Savings Association (PLSA), which impose limits on, for example, the percentage of shares that can be issued non-pre-emptively (i.e. to new investors for cash) and the discount to market price; the number of shares that an issuer can buy back under a general authority; and the remuneration and severance packages that can be awarded to executive directors.

An issuer must treat all shareholders who are in the same position equally.

It is almost always the case that each ordinary share carries one vote that can be exercised without restriction.  However, where there are weighted voting rights, the UKLR sets out certain additional requirements, including that the weighted voting rights of a shareholder must end 10 years after the date the issuer first had a class of shares admitted to listing.

Under UK company law, shareholders in a UK incorporated issuer generally have the following basic rights:

• issues of new shares require the approval of shareholders holding shares with a simple majority of voting rights of those entitled to vote, which approval is normally given, up to certain limits, at the issuer's annual general meeting;
• new shares that are issued for cash must be issued to existing shareholders in proportion to their existing shareholdings, unless such pre-emption rights are disapplied with the approval of a 75% vote of the issuer’s shareholders entitled to vote who attend and vote in person or by proxy;
• any director can be removed from the board by means of an ordinary resolution (which requires shareholders holding shares with a simple majority of voting rights of those entitled to vote to approve it). In principle, an issuer’s articles of association may specify that directors can be removed with the sanction of a lesser percentage of shareholders, or of a particular investor, but this is rare for issuers. Most issuer articles also allow shareholders to put forward a director and appoint that director to the board by ordinary resolution;
• shareholder(s) with 5% or more of the issuer’s paid up share capital can force the directors to convene a shareholders’ meeting to consider any resolution put by the requesting shareholder(s) (such as a resolution to remove one or all of the directors); and
• shareholders with 5% or more of the total voting rights, or at least 100 shareholders who each hold an average of at least £100 of paid up capital, may put a resolution at the next annual general meeting, and require the issuer to circulate a statement to all the members to express their view on a particular resolution.

Any person who, together with his associates, acquires or sells shares which take his holding to, above or below 3% or any whole percentage point above this must notify the FCA and the issuer within two trading days, and in turn the issuer must notify the market within one trading day. For non-UK companies, the TD threshold reporting levels apply.

All issuers are subject to MAR and must disclose inside information as soon as possible. Issuers can delay disclosure to protect their legitimate interests (e.g. if it would jeopardise ongoing negotiations), provided the public is not misled and the information is kept confidential.

Issuers must publish annual and half-yearly financial results, in accordance with the TD. Annual results must include a report on certain specific information about the remuneration and service contracts of executive directors. Many issuers also choose to announce a preliminary statement of their annual financial results, containing the key figures but without most of the notes and additional information, that will later be included in the annual results. Some issuers choose to also publish interim trading updates each quarter.

The annual financial report of an issuer must also include a statement setting out whether the issuer has included climate-related financial disclosures consistent with the Task Force on Climate Financial Disclosures (TCFD) Recommendations and Recommended Disclosures in its annual financial report.

Audited annual results must be published within 4 months of the year end and unaudited interim results within 3 months of the half-year end. If those deadlines are missed, trading in the issuer's shares may be suspended.

All issuers are subject to MAR, which restricts directors and certain senior employees (Persons discharging managerial responsibilities (PDMRs)) from dealing in the issuer’s shares during “closed periods” prior to the announcement of half-yearly and annual results and at any time when there exists any unpublished price-sensitive information relating to the issuer (whether or not the PDMR who is proposing to deal knows of the information himself). Any dealings by such persons must be notified to the issuer and the FCA promptly and no later than three working days after the date of the transaction.  The issuer must in turn announce details to the market within two working days of receiving the notification. Issuers typically adopt a share dealing code which requires PDMRs and sometimes other employees to seek clearance from the issuer before dealing in the issuer’s shares.

The following documents need to be approved by the FCA:

• prospectuses and listing particulars;
• reverse takeover circulars;
• certain circulars proposing to cancel the listing of an issuer; and
• circulars proposing to transfer a listing of equity shares from the equity shares (transition) category to the equity shares (commercial companies) category and proposing to transfer a listing of equity shares from the equity shares (commercial companies) category to the equity shares (international commercial companies secondary listing) category, the equity shares (shell companies) category, the closed-ended investment funds category or the open-ended investment companies category.

Under the UKLR, copies of various documents must also be provided to the FCA, including, but not limited to: 

• the relevant document that sets out the terms and conditions on which the issuer’s listed shares were issued;
• a document describing the rights attached to its listed shares, limitations on such rights and the procedure for the exercise of such rights;
• where there have been updates to the rights attached to listed equity shares a document setting out the updated rights;
• all circulars issued (whether or not they require approval by the FCA), and notices, reports or other documents to which the UKLR apply; and
• all resolutions passed by the issuer, other than resolutions concerning ordinary business at an annual general meeting.

Offer documents published in connection with a takeover are not approved by the FCA, but the Panel on Takeovers and Mergers (which regulates UK takeovers) scrutinises all aspects of takeover activity and can require parties to publish a correction or clarification of any statement or position and can impose sanctions on parties which fail to include all information specified by (or which otherwise fails to comply with) the UK City Code on Takeovers and Mergers (Takeover Code).

The requirement for a mandatory offer under the Takeover Code is triggered where a person acquires interests in shares which take that person’s aggregate holding to 30% or more of the voting rights in an issuer, or when an aggregate holding which is already over 30% is increased. Interests held by parties who are “acting in concert” with a person are attributed to that person.

The Takeover Code applies to all public limited companies which have their registered offices in the UK, Channel Islands or Isle of Man and to certain EEA issuers whose shares are listed on the Official List (subject to certain exemptions for dual-listed issuers).

To transfer its equity shares from the equity shares (commercial companies) category to the equity shares (international commercial companies secondary listing) category or to the equity shares (shell companies) category, an issuer must make an announcement of the proposed transfer and send a circular convening a shareholders’ meeting. Shareholders holding shares carrying not less than 75% of the voting rights of those entitled to vote who attend and vote in person or by proxy must approve the transfer. If the issuer has a controlling shareholder, a majority of the independent shareholders also needs to agree to the transfer.  The transfer cannot occur until at least 20 business days after (i) shareholder approval is given; and (ii) the announcement giving notice of the intention to transfer is published.

To de-list its equity shares from the Official List entirely, an issuer listed in the equity securities (commercial companies) category must normally convene a shareholders’ meeting and obtain the approval of at least 75% of those who attend and vote in person or by proxy. For this purpose, the issuer must send a circular to its shareholders, and make an announcement, giving details of the proposed cancellation. If the issuer has a controlling shareholder, a majority of the independent shareholders also needs to agree to the cancellation.  Cancellation cannot take effect until at least 20 business days after shareholder approval is obtained. There is no requirement for a majority shareholder or the issuer to provide the minority with an exit (e.g. by offering to buy their shares).

No shareholder approval or circular is required for a cancellation if:

• all or a majority of the issuer’s equity shares have been acquired pursuant to a takeover offer;
• the issuer’s share capital has been restructured by a court approved scheme of arrangement; or
• the issuer is on the brink of insolvency.

In each such case, the issuer will need to make an announcement stating when cancellation will occur, which must be at least 20 business days later.

Issuers incorporated in the EEA, Switzerland, US incorporated issuers that comply with the periodic disclosure requirements of Section 13(a) of Securities Exchange Act of 1934 and the rules thereunder governing financial reporting by US issuers and Canadian incorporated issuers that comply with certain Canadian disclosure requirements, are exempt from the obligation to publish annual and half-yearly financial results, in accordance with the TD. This is because such issuers are subject to rules considered by the FCA to be equivalent.

Certain rules on notifying major shareholdings do not apply to overseas issuers that are incorporated in the US, Japan, Israel or Switzerland (which are subject to rules considered by the FCA to be equivalent). For other issuers, persons with an interest in the issuer’s shares must notify the issuer and the FCA of their holdings on the basis of the thresholds in the TD (5%, 10%, 15%, 20%, 25%, 30%, 50% and 75%), rather than the super-equivalent thresholds (3% and every whole percentage above that) referred to above. Notification must be made within four trading days, instead of two trading days for other issuers.

Overseas issuers are not required by the UKLR  to obtain shareholder approval for employee share schemes or long-term incentive schemes.

An overseas issuer must inform the FCA if its listing has been suspended, cancelled or restored by an overseas exchange or overseas authority.  The FCA will not automatically suspend, cancel or restore an overseas issuer’s listing at the request of an overseas exchange or overseas authority.  If the overseas issuer requests a suspension, cancellation or restoration of its securities after a suspension, cancellation or restoration on its home exchange, it must notify the FCA in writing. If the FCA is requested by an overseas exchange or overseas authority to suspend, cancel or restore the listing of an overseas issuer’s securities, the FCA will, where practical, contact the overseas issuer or its sponsor beforehand.  If the FCA is unable to contact the overseas issuer or sponsor, it will suspend, cancel or restore the listing when it is satisfied the listing of the relevant securities has or will be suspended, cancelled or restored on the overseas issuer’s home exchange.

Subject to certain limited exceptions, an issuer whose registered office is not in the UK, Channel Islands or Isle of Man is not subject to the Takeover Code. But in order to attract institutional investors, such overseas issuers often include provisions in their constitutional documents that give shareholders rights similar to the key rights provided by the Takeover Code (including the obligation for a major shareholder to make a mandatory offer in the circumstances described above).

Similarly, in order to attract institutional investors, non-UK issuers sometimes add into their constitutional documents provisions that are designed to provide investors with rights similar to those they would have enjoyed under UK company law (see Relations with shareholders above).

AIM is a non-regulated market and is an SME growth market for the purposes of MAR and the Prospectus Regulation.

Under the AIM Rules, the following matters require shareholder approval:

• reverse takeovers (i.e. broadly, when the issuer acquires a business larger than itself);
• acquisitions or disposals that result in a fundamental change in the business, board of directors or voting control of the issuer; and
• de-listing, other than following a takeover or when the issuer is transferring to a comparable market.

AIM investment companies also require shareholder approval for departures from their investment policy.

Under UK company law shareholder approval is required for, among other things:

• a change to the issuer’s share capital or constitution;
• the payment of a final dividend; or

issues of new shares for cash (see further below). 

AIM issuers are required to state on their website which recognised code of corporate governance they apply, how they comply with that code and, where they depart from it, an explanation of the reasons for doing so. Most AIM issuers (90%) have adopted the QCA Corporate Governance Code published by the Quoted Companies Alliance.

If the issuer’s major shareholders are members of the IA or the PLSA, the issuer may also comply with the guidelines published by those bodies.

There are few specific requirements under the AIM Rules, but UK company law gives basic protections to shareholders against dilution and unfair prejudice.

It is almost always the case that each ordinary share carries one vote that can be exercised without restriction.

Under UK company law, shareholders have the following basic rights:

• issues of new shares require the approval of shareholders holding shares carrying a simple majority of voting rights of those entitled to vote, which approval is normally given, up to certain limits, at the issuer’s annual general meeting;
• new shares that are issued for cash must be issued to existing shareholders in proportion to their existing shareholdings, unless such pre-emption rights are disapplied with the approval of the issuer’s shareholders holding shares carrying not less than 75% of voting rights of those entitled to vote who attend and vote in person or by proxy;
• any director can be removed from the board by means of an ordinary resolution (which requires shareholders holding shares carrying a simple majority of voting rights of those entitled to vote to approve it). In principle, an issuer’s articles of association may specify that directors can be removed with the sanction of a lesser percentage of shareholders, or of a particular investor, but this is rare for AIM issuers. Most AIM issuer articles also allow shareholders to put forward a director and appoint him to the board by ordinary resolution;
• shareholder(s) with 5% or more of the issue’s paid up share capital can force the directors to convene a shareholders’ meeting to consider any resolution put by the requesting shareholder(s) (such as a resolution to remove one or all of the directors); and
• shareholders with 5% or more of the total voting rights, or at least 100 shareholders who each hold an average of at least £100 (c. €117) of paid-up capital, may put a resolution at the next annual general meeting, and require the issuer to circulate a statement to all the members to express their views on a particular resolution.

Any person who, together with that person’s associates, acquires or sells shares which take the combined holding to, above or below 3% or any whole percentage point above this must notify the issuer within two trading days, and in turn the issuer must notify the market without delay.

All issuers are subject to MAR and must disclose inside information as soon as possible. Issuers can delay disclosure to protect their legitimate interests (e.g. if it would jeopardise ongoing negotiations), provided the public is not misled and the information is kept confidential. The AIM Rules impose similar obligations on issuers relating to disclosure of price sensitive information.

Audited annual results must be published within six months of financial year end; unaudited half-yearly results must be published within three months of the end of the half year. If those deadlines are missed, trading in the issuer’s shares will be suspended.  All financial results must be prepared under IFRS.

No remuneration report is required (although certain details of directors’ remuneration are required and most AIM listed issuers will voluntarily include one).

All issuers are subject to MAR and are required by the AIM Rules to adopt a code of dealings that prevents all directors and certain senior employees (Persons discharging managerial responsibilities (PDMRs)) who are likely to possess price-sensitive information from dealing in the issuer’s shares during “close periods” prior to the announcement of annual and half-yearly results and at any other time when the issuer has unpublished price-sensitive information. Any dealings by such persons must be notified to the issuer, which must in turn announce details to the market.

None, except where (unusually) a prospectus is required, which must be approved by the FCA.

Offer documents published in connection with a takeover are not approved by the FCA, but the Panel on Takeovers and Mergers (which regulates UK takeovers) scrutinises all aspects of takeover activity and can require parties to publish a correction or clarification of any statement or position and can impose sanctions on parties which fail to include all information specified by, or which otherwise fail to comply with, the Takeover Code.

The requirement for a mandatory offer is triggered when a person acquires interests in shares that take his aggregate holding to 30% or more of the voting rights in an issuer, or where an aggregate holding which is already over 30% is increased. Interests held by parties “acting in concert” with a person are attributed to that person.

The Takeover Code applies to all public limited companies which have their registered offices in the UK, Channel Islands or Isle of Man but otherwise does not generally apply to non-UK issuers listed on AIM. However, non-UK AIM-listed issuers which are not subject to takeover rules similar to the Takeover Code will often voluntarily include provisions in their constitutional documents to reflect the key provisions of the Takeover Code, including the obligation to make a mandatory offer, in order to attract institutional investors.

The issuer must announce its intention to cancel the listing, giving reasons, and cancellation cannot take effect for at least 20 business days. Except when the shares will continue to be tradable on another significant market, or when at least 75% of the issuer’s shares have been or will be acquired through a takeover offer, the issuer must also convene a shareholders’ meeting and obtain the approval of shareholders holding shares carrying at least 75% of the voting rights of those entitled to vote who attend and vote in person or by proxy. If shareholder approval is required, cancellation cannot take effect until at least five business days after the approval is obtained.

All issuers are required to announce certain details when a person’s interest in the issuer’s shares reaches or exceeds 3% or any whole percentage point above this. If an issuer’s domestic law does not require holders of interests in the issuer’s shares to notify it when their holding reaches such a level, and to provide the details required by the AIM Rules, an issuer incorporated outside the UK is expected to impose such obligations on shareholders by means of provisions in its constitution.

An issuer whose registered office is not in the UK, Channel Islands or Isle of Man is not subject to the Takeover Code. But in order to attract institutional investors, such issuers often include provisions in their constitution that give shareholders rights similar to key rights provided by the Takeover Code (including the obligation for a shareholder with an aggregate holding of shares carrying 30% or more of the voting rights to make a mandatory offer in the circumstances described above).

Similarly, in order to attract institutional investors, non-UK issuers sometimes add into their constitutional documents provisions that are designed to provide investors with rights similar to those they would have enjoyed under UK company law (see Relations with shareholders above).

An issuer must announce all major transactions and those entered into with a party connected to the issuer.