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LR 13.1 Preliminary

Application

LR 13.1.1 R RP

1This chapter applies to a company that has a primary listing of equity securities.

Listed company to ensure circulars comply with chapter

LR 13.1.2 R RP

A listed company must ensure that circulars it issues to holders of its listedequity securitiescomply with the requirements of this chapter.

Incorporation by reference

LR 13.1.3 R RP

Information may be incorporated in a circular by reference to relevant information contained in:

  1. (1)

    a prospectus or listing particulars; or

  2. (2)

    any other published document that has been filed with the FSA.

LR 13.1.4 R RP

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

LR 13.1.5 R RP

Information required by LR 13.3.1R (1)(2)must not be incorporated in the circular by reference to information contained in another document.

LR 13.1.6 R RP

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

LR 13.2 Approval of circulars

Circulars to be approved

LR 13.2.1 R RP

A listed company must not circulate or publish a circular unless it has been approved by the FSA.

Circulars not requiring approval

LR 13.2.2 R

A circular does not need to be approved under LR 13.2.1 R if:

  1. (1)

    it is of a type referred to in LR 13.8 or only relates to a proposed change of name or, in any other case, the FSA has agreed that it does not need to be approved;

  2. (2)

    it complies with LR 13.3 and also, if it is a circular referred to in LR 13.8, any relevant requirements in that section; and

  3. (3)

    neither it, nor the transaction or matter to which it relates, has unusual features.

When circulars about purchase of own equity securitiesneed approval

LR 13.2.3 R
  1. (1)

    A circular relating to a resolution to give a listed company authority to purchase its own equity securitiesmust be approved by the FSA under LR 13.2.1 R if:

    1. (a)

      the purchase by the company of its own securities is to be made from a related party (whether directly or through intermediaries); or

    2. (b)

      the exercise in full of the authority sought would result in the purchase of 25% or more of the company's issued equity shares (excluding treasury shares).

  2. (2)

    A circular referred to in paragraph (1)(a) does not need to be approved if:

    1. (a)

      a tender is made to all holders of the class of securities on the same terms; or

    2. (b)

      for a market purchase under a general authority granted by shareholders, it is made without prior understanding, arrangement or agreement between the company and any related party.

Approval procedures

LR 13.2.4 R RP

The following documents (to the extent applicable) must be lodged with the FSA in final form before it will approve a circular:

  1. (1)

    a Sponsors Declaration for the Production of a Circular completed by the sponsor;

  2. (2)

    for a class 1 circular or related party circular, a letter setting out any items of information required by this chapter that are not applicable in that particular case;

  3. (3)

    the sponsor's Confirmation of Independence; and

  4. (4)

    any other document that the FSA has sought in advance from the listed company or its sponsor.

LR 13.2.5 R RP

Two copies of the following documents in draft form must be submitted at least 10 clear business days before the date on which it is intended to publish the circular:

  1. (1)

    the circular; and

  2. (2)

    the letters and documents referred to in LR 13.2.4R (1) and (2).

LR 13.2.6 R

The sponsor's Confirmation of Independence in final form must be submitted at least 10 clear business days before the date on which it is intended to publish the circular.

LR 13.2.7 R RP

If a circular submitted for approval is amended, two copies of amended drafts must be resubmitted, marked to show changes made to conform with FSA comments and to indicate other changes.

Approval of circulars

LR 13.2.8 G RP

The FSA will approve a circular if it is satisfied that the requirements of this chapter are satisfied.

LR 13.2.9 G RP

The FSA will only approve a circular between 9a.m. and 5.30p.m. on a business day (unless alternative arrangements are made in advance).

Note: LR 9.6.1 R requires a company to forward to the FSA two copies of all circulars issued (whether or not they require approval) for publication on the document viewing facility.

LR 13.3 Contents of all circulars

Contents of all circulars

LR 13.3.1 R RP

Every circular sent by a listed company to holders of its listed securities must:

  1. (1)

    provide a clear and adequate explanation of its subject matter giving due prominence to its essential characteristics, benefits and risks;

  2. (2)

    state why the security holder is being asked to vote or, if no vote is required, why the circular is being sent;

  3. (3)

    if voting or other action is required, contain all information necessary to allow the security holders to make a properly informed decision;

  4. (4)

    if voting or other action is required, contain a heading drawing attention to the document's importance and advising security holders who are in any doubt as to what action to take to consult appropriate independent advisers;

  5. (5)

    if voting is required, contain a recommendation from the Board as to the voting action security holders should take for all resolutions proposed, indicating whether or not the proposal described in the circular is, in the Board's opinion, in the best interests of security holders as a whole;

  6. (6)

    state that if all the securities have been sold or transferred by the addressee the circular and any other relevant documents should be passed to the person through whom the sale or transfer was effected for transmission to the purchaser or transferee;

  7. (7)

    if new securities are being issued in substitution for existing securities, explain what will happen to existing documents of title;

  8. (8)

    not include any reference to a specific date on which listed securities will be marked "ex" any benefit or entitlement which has not been agreed in advance with the RIE on which the company'ssecurities are or are to be traded;

  9. (9)

    if it relates to a transaction in connection with which securities are proposed to be listed, include a statement that application has been or will be made for the securities to be admitted and, if known, a statement of the following matters:

    1. (a)

      the dates on which the securities are expected to be admitted and on which dealings are expected to commence;

    2. (b)

      how the new securities rank for dividend or interest;

    3. (c)

      whether the new securities rank equally with any existing listed securities;

    4. (d)

      the nature of the document of title;

    5. (e)

      the proposed date of issue;

    6. (f)

      the treatment of any fractions;

    7. (g)

      whether or not the security may be held in uncertificated form; and

    8. (h)

      the names of the RIEs on which securities are to be traded;

  10. (10)

    if a person is named in the circular as having advised the listed company or its directors, a statement that the adviser has given and has not withdrawn its written consent to the inclusion of the reference to the adviser's name in the form and context in which it is included; and

  11. (11)

    if the circular relates to cancelling listing, state whether it is the company's intention to apply to cancel the securities'listing.

LR 13.3.2 R RP

If another rule provides that a circular of a particular type must include specified information, then that information is (unless the contrary intention appears) in addition to the information required under this section.

Pro forma financial information in certain circulars1

LR 13.3.3 R RP

1If a listed company includes pro forma financial information in a class 1 circular, a related party circular or a circular relating to the purchase by the company of 25% or more its issued equity shares (excluding treasury shares), it must comply with the requirements for pro forma financial information set out in the PD Regulation.

LR 13.4 Class 1 circulars

Class 1 circulars

LR 13.4.1 R RP

A class 1 circular must also include the following information:

  1. (1)

    the information given in the notification (see LR 10.4.1R);

  2. (2)

    the information required by LR 13 Annex 1;

  3. (3)

    the information required by LR 13.5 (if applicable); and

  4. (4)

    a declaration by its directors in the following form (with appropriate modifications):

    "The directors of [the company], whose names appear on page [ ], accept responsibility for the information contained in this document. To the best of the knowledge and belief of the directors (who have taken all reasonable care to ensure that such is the case) the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information.";

  5. (5)

    a statement of the effect of the acquisition or disposal on the group's earnings and assets and liabilities; and

  6. (6)

    if a statement or report attributed to a person as an expert is included in a circular (other than a statement or report incorporated by reference from a prospectus or listing particulars), a statement to the effect that the statement or report is included, in the form and context in which it is included, with the person's consent.

LR 13.4.1A G RP

1The information necessary under LR 13.3.1R (3) includes all the material terms of the class 1 transaction including the consideration.

LR 13.4.2 R RP

If a class 1 circular contains a modified accountant's report, as described in LR 13.5.25 R, the class 1 circular must set out:

  1. (1)

    whether the modification is significant to shareholders;

  2. (2)

    if the modification is significant to shareholders, the reason for its significance; and

  3. (3)

    a statement from the directors explaining why they are able to recommend the proposal set out in the class 1 circular notwithstanding the modified accountant's report.

Takeover offers

LR 13.4.3 R RP
  1. (1)

    If a class 1 circular relates to a takeover offer which is recommended by the offeree's board and the listed company has had access to due diligence information on the offeree at the time the class 1 circular is published, the listed company must prepare and publish the working capital statement on the basis that the acquisition has taken place.

  2. (2)

    If a class 1 circular relates to a takeover offer which has not been recommended by the offeree's board or the listed company has not had access to due diligence information on the offeree at the time the class 1 circular is published, then the listed company must comply with paragraphs (3) to (6).

  3. (3)

    The listed company must prepare and publish the working capital statement on the listed company on the basis that the acquisition has not taken place. The working capital statement prepared on the basis that the acquisition has taken place must be updated and published and sent to shareholders within 28 days of the offer becoming or being declared wholly unconditional. The circular must state that the statements on a combined basis will be made available as soon as possible.

  4. (4)

    Other information on the offeree required by LR 13 Annex 1 should be disclosed in the class 1 circular on the basis of information published or made available by the offeree and of which the listed company is aware and is free to disclose.

  5. (5)

    If the takeover offer becomes unconditional, any change or addition to the information disclosed which is material in relation to the listedcompany, should be disclosed in a circular published (in the absence of exceptional circumstances) within 28 days after the offer becoming or being declared wholly unconditional.

  6. (6)

    If the takeover offer has been recommended but the listed company does not have access to due diligence information on the offeree, the listed company must disclose in the class 1 circular why access has not been given to that information.

Acquisition or disposal of property

LR 13.4.4 R RP

If a class 1 transaction relates to:

  1. (1)

    the acquisition or disposal of property; or

  2. (2)

    the acquisition of a property company that is not listed;

the class 1 circular must include a property valuation report.

LR 13.4.5 R RP

If a listed company makes significant reference to the value of a property in a class 1 circular, the class 1 circular must include a property valuation report.

Acquisition or disposal of mineral resources

LR 13.4.6 R RP

If a class 1 transaction relates to an acquisition or disposal of mineral resources the class 1 circular must include:

  1. (1)

    a mineral expert's report; and

  2. (2)

    a glossary of the technical terms used in the mineral expert's report.

LR 13.4.7 G RP

For a disposal, the FSA may modify the information requirements in LR 13.4.6 R if the information would not provide significant additional information.

Acquisition of a scientific research based company or related assets

LR 13.4.8 R RP

If a class 1 transaction relates to the acquisition of a scientific research based company or related assets, the class 1 circular must contain an explanation of the transaction's impact on the acquirer's business plan and the information set out in Section 1c of Part III (Scientific research based companies) 1of the CESR recommendations.

1

LR 13.5 Financial information in Class 1 Circulars

When financial information must be included in a class 1 circular

LR 13.5.1 R RP

Financial information, as set out in this section, must be included by a listed company in a class 1 circular if:

  1. (1)

    the listed company is seeking to acquire an interest in a target which will result in a consolidation of the target's assets and liabilities with those of the listed company; or

  2. (2)

    the listed company is seeking to dispose of an interest in a target which will result in the assets and liabilities no longer being consolidated; or

  3. (3)

    the target ("A") has itself acquired a target ("B") and:

    1. (a)

      A acquired B within the three year reporting period set out in LR 13.5.13R (1) or after the date of the last published accounts; and

    2. (b)

      the acquisition of B, at the date of its acquisition by A, would have been classified as a class 1 acquisition in relation to the listed company at the date of acquisition of A by the listed company.

LR 13.5.2 G

A listed company that is entering into a class 1 transaction which does not fall within LR 13.5.1 R must include in a class 1 circular such financial information as the FSA may specify.

LR 13.5.3 G

LR 13.5.1 R will not normally apply to a property company making an acquisition or disposal of property.

Form of accounting information

LR 13.5.4 R RP
  1. (1)

    A listed company must present all financial information that is disclosed in a class 1 circular in a form that is consistent with the accounting policies adopted in its own latest annual consolidated accounts.

  2. (2)

    The requirement set out in paragraph (1) does not apply to financial information presented in accordance with LR 13.5.36 R.

LR 13.5.5 G RP

Accounting policies include accounting standards and accounting disclosures.

Source of information

LR 13.5.6 R RP

A listed company must cite the source of all financial information that it discloses in a class 1 circular.

LR 13.5.7 G RP

In complying with LR 13.5.6 R a listed company should:

  1. (1)

    state whether the financial information was extracted from accounts, internal financial accounting records, internal management accounting records, an external or other source;

  2. (2)

    state whether financial information that was extracted from audited accounts was extracted without material adjustment; and

  3. (3)

    indicate which aspects of the financial information relate to:

    1. (a)

      historical financial information;

    2. (b)

      forecast or estimated financial information; or

    3. (c)

      pro forma financial information prepared in accordance with Annex 1 and Annex 2 of the PD Regulation;

    with reference made to where the basis of presentation can be found.

LR 13.5.8 R RP

If financial information has not been extracted directly from audited accounts, the class 1 circular must:

  1. (1)

    set out the basis and assumptions on which the financial information has been prepared; and

  2. (2)

    include a statement that the financial information is unaudited or not reported on by an accountant.

LR 13.5.9 R RP

A listed company must provide investors with all necessary information to understand the context and relevance of non-statutory figures, including a reconciliation to statutory equivalents.

Prominence of information

LR 13.5.10 R RP

A listed company must give audited historical financial information greater prominence in a class 1 circular than any forecast, estimated, pro forma or non-statutory financial information.

Summary of financial information

LR 13.5.11 R RP

A listed company that provides a summary of financial information in a class 1 circular must include in the circular a statement that investors should read the whole document and not rely solely on the summarised financial information.

Financial information table

LR 13.5.12 R RP

A listed company that is required by LR 13.5.1 R to produce financial information in a class 1 circular must include in the circular a financial information table.

Financial information table: reporting period

LR 13.5.13 R RP

A financial information table must cover one of the following reporting periods:

  1. (1)

    a period of three years up to the end of the latest financial period for which the target or its parent has prepared audited accounts;

  2. (2)

    a lesser period than the period set out in paragraph (1) if the target's business has been in existence for less than three years; or

  3. (3)

    for a class 1 disposal, the period set out in LR 13.5.19 R.

Financial information table: class 1 acquisitions

LR 13.5.14 R RP

A listed company must include, in a financial information table, financial information that covers:

  1. (1)

    the target; and

  2. (2)

    the target'ssubsidiary undertakings, if any.

LR 13.5.15 R

A listedcompany must include in a separate financial information table, financial information that covers those undertakings which are to become the target'ssubsidiary undertakings, if applicable.

LR 13.5.16 R
  1. (1)

    This rule applies if a listed company is seeking to acquire an interest in a target ("A") that has itself acquired a target ("B") and:

    1. (a)

      A acquired B within the three year reporting period set out in LR 13.5.13R (1) or after the date of the last published accounts; and

    2. (b)

      the acquisition of B, at the date of its acquisition by A, would have been classified as a class 1 acquisition in relation to the listed company at the date of acquisition of A by the listed company.

  2. (2)

    A listed company must include in a financial information table pre-acquisition financial information on B that covers the period from the commencement of the three year reporting period set out in LR 13.5.13R (1) up to the date of acquisition by A.

LR 13.5.17 G

If the target made a series of acquisitions that:

  1. (1)

    are not caught individually by LR 13.5.16 R; and

  2. (2)

    were made during or subsequent to the reporting period set out in LR 13.5.13R (1) or (2);

the FSA may require additional financial information about those acquisitions to be included in the financial information table.

LR 13.5.18 R RP

A listed company must ensure that a financial information table includes, for each of the periods covered by the table:

  1. (1)

    a balance sheet and its explanatory notes;

  2. (2)

    an income statement and its explanatory notes;

  3. (3)

    a cash flow statement and its explanatory notes;

  4. (4)

    a statement showing either all changes in equity or changes in equity other than those arising from capital transactions with owners and distributions to owners;

  5. (5)

    the accounting policies; and

  6. (6)

    any additional explanatory notes.

Financial information table: class 1 disposal

LR 13.5.19 R
  1. (1)

    In the case of a class 1 disposal a financial information table must include, for the target:

    1. (a)

      the last audited consolidated balance sheet; and

    2. (b)

      the audited consolidated income statements for the last three years;

    if audited accounts have been prepared for the target.

  2. (2)

    If audited accounts have not been prepared for the target, the information required by paragraph (1) must be extracted from the consolidation schedules that underlie the listed company's audited consolidated accounts. The income statements must be drawn up to at least the level of profit or loss for the period.

  3. (3)

    If the target has not been owned by the listed company for the entire reporting period set out in paragraph (1)(b), the information required by paragraph (1) may be extracted from the target's accounting records.

LR 13.5.20 G

If a dispensation of LR 13.5.19 R has been granted because it is not possible to provide a meaningful allocation of costs, such as interest and tax, the class 1 circular should contain a statement to this effect.

Financial information table: accountant's opinion

LR 13.5.21 R RP

A financial information table must be accompanied by an accountant's opinion unless LR 13.5.27 R, LR 13.5.28 R or LR 13.5.29 G applies.

LR 13.5.22 R RP

An accountant's opinion must set out:

  1. (1)

    whether, for the purposes of the class 1 circular, the financial information table gives a true and fair view of the financial matters set out in it; and

  2. (2)

    whether the financial information table has been prepared in a form that is consistent with the accounting policies adopted in the listed company's latest annual accounts.

LR 13.5.23 R RP

An accountant's opinion must be given by an independent accountant who is qualified to act as an auditor.

LR 13.5.24 G RP

An accountant will be independent if he or she complies with the standards and guidelines on independence issued by its national accountancy and auditing bodies.

LR 13.5.25 R RP

If an accountant's report, which contains the accountant's opinion required by LR 13.5.21 R, is modified details of all material matters must be set out in the class 1 circular, including:

  1. (1)

    all the reasons for the modification; and

  2. (2)

    a quantification of the effects, if both relevant and practicable.

LR 13.5.26 R RP

If the accounts of a target that falls within LR 13.5.14 R to LR 13.5.16 R contain a modified auditor's report, details of the material matters giving rise to the modification must be set out in the class 1 circular.

Accountant's opinion: acquisitions of publicly traded companies

LR 13.5.27 R RP
  1. (1)

    This rule applies if the target is:

    1. (a)

      admitted to trading; or

    2. (b)

      a company whose securities are listed on an overseas investment exchange or admitted to trading on an overseasregulated market;

    and a material adjustment needs to be made to the target's financial statements to achieve consistency with the listed company's accounting policies.

  2. (2)

    A listed company must include the following in the class 1 circular:

    1. (a)

      a reconciliation of financial information on the target, for all periods covered by the financial information table, on the basis of the listed company's accounting policies;

    2. (b)

      an accountant's opinion that sets out:

      1. (i)

        whether the reconciliation of financial information in the financial information table has been properly compiled on the basis stated; and

      2. (ii)

        whether the adjustments are appropriate for the purpose of presenting the financial information (as adjusted) on a basis consistent in all material respects with the listed company's accounting policies.

When an accountant’s opinion is not required

LR 13.5.28 R

An accountant's opinion is not required if the target is:

  1. (1)

    admitted to trading; or

  2. (2)

    a company whose securities are listed on an overseas investment exchange or admitted to trading on an overseasregulated market;

and no material adjustment needs to be made to the target's financial statements to achieve consistency with the listed company's accounting policies.

LR 13.5.29 G

In the case of a class 1 disposal a listed company is not required to include an accountant's opinion with the financial information table.

Half-yearly and quarterly financial information

LR 13.5.30 R RP

If the target of an acquisition has published half-yearly or quarterly financial information subsequent to the period set out in LR 13.5.13R (1) or (2), such financial information must be:

  1. (1)

    reproduced in the class 1 circular; and

  2. (2)

    reconciled in accordance with LR 13.5.27R (2), if applicable.

Pro forma financial information1

LR 13.5.31 G RP

1 LR 13.3.3 R sets out requirements for pro forma information in a class 1 circular.

Profit forecasts and profit estimates

LR 13.5.32 R RP

If a listed company includes a profit forecast or a profit estimate in a class 1 circular it must:

  1. (1)

    comply with the requirements for a profit forecast or profit estimate set out in Annex 1 of the PD Regulation except that a listed company does not need to include a report on the forecast or estimate from an accountant in the class 1 circular; and

  2. (2)

    include a statement confirming that the profit forecast or profit estimate has been properly compiled on the basis of assumptions stated and that the basis of accounting is consistent with the accounting policies of the listed company.

LR 13.5.33 R RP

If, prior to the class 1 transaction, a profit forecast or profit estimate was published that:

  1. (1)

    relates to the listed company, a significant part of the listedcompanygroup, or the target; and

  2. (2)

    is still outstanding;

the listed company must include that profit forecast or profit estimate in the class 1 circular or include an explanation of why the profit forecast or profit estimate is no longer valid.

LR 13.5.34 G RP

A listed company should consider LR 9.2.18 R regarding information that must be published after a class 1 transaction.

LR 13.5.35 G

LR 13.5.32 R and LR 13.5.33 R do not apply to class 1 disposals.

Subsequent publication of unaudited financial information

LR 13.5.36 R
  1. (1)

    A listed company that publishes unaudited financial information in a class 1 circular must:

    1. (a)

      reproduce that financial information in its next annual report and accounts;

    2. (b)

      produce and disclose in the annual report and accounts the actual figures for the same period covered by the information reproduced under paragraph (a); and

    3. (c)

      provide an explanation of the difference, if there is a difference of 10% or more between the figures required by paragraph (b) and those reproduced under paragraph (a).

  2. (2)

    Paragraph (1) does not apply to:

    1. (a)

      pro forma financial information prepared in accordance with Annex 1 and Annex 2 of the PD Regulation; or

    2. (b)

      any preliminary statements of annual results or half-yearly or quarterly reports that are reproduced in the class 1 circular; or

    3. (c)

      any additional analysis of financial information that is set out in a financial information table.

LR 13.6 Related party circulars

Related party circulars

LR 13.6.1 R RP

A related party circular must also include:

  1. (1)

    in all cases the following information referred to in the PD Regulation relating to the company:

    Paragraph of Annex 1 of the

    PD Regulation

    ;

    1. (a)

      Annex 1 item 5.1.1 – Issuer name;

    2. (b)

      Annex 1 item 5.1.4 – Issuer address;

    3. (c)

      Annex 1 item 18.1 – Major shareholders;

    4. (d)

      Annex 1 item 20.9 – Significant changes;

    5. (e)

      Annex 1 item 22 – Material contracts (if it is information which shareholders of the company would reasonably require to make a properly informed assessment of how to vote);

    6. (f)

      Annex 1 item 24 – Documents on display;

  2. (2)

    for a transaction or arrangement where the related party is (or was within the 12 months before the transaction or arrangement), a director or shadow director, or an associate of a director or shadow director, of the company (or of any other company which is its subsidiary undertaking or parent undertaking or a fellow subsidiaryundertaking) the following information referred to in the PD Regulation relating to that director:

    Paragraph of Annex 1 of the PD Regulation:

    1. (a)

      Annex 1 item 16.2 – Service contracts;

    2. (b)

      Annex 1 item 17.2 – Directors' interests in shares;

    3. (c)

      Annex 1 item 19 – Related party transactions;

  3. (3)

    full particulars of the transaction or arrangement, including the name of the related party concerned and of the nature and extent of the interest of the party in the transaction or arrangement and also a statement that the reason the security holder is being asked to vote on the transaction or arrangement is because it is with a related party;

  4. (4)

    for an acquisition or disposal of an asset where any percentage ratio is 25% or more and for which appropriate financial information is not available, an independent valuation;

  5. (5)

    a statement by the board that the transaction or arrangement is fair and reasonable as far as the security holders of the company are concerned and that the directors have been so advised by an independent adviser acceptable to the FSA;

  6. (6)

    if applicable, a statement that the related party will not vote on the relevant resolution, and that the related party has undertaken to take all reasonable steps to ensure that its associates will not vote on the relevant resolution, at the meeting;

  7. (7)

    for a transaction where any percentage ratio is 25% or more, the information required to be included in a class 1 circular;

  8. (8)

    if LR 11.1.11 R (Aggregation of transactions) applies, details of each of the transactions or arrangements being aggregated; and

  9. (9)

    if a statement or report attributed to a person as an expert is included in a circular (other than a statement or report incorporated by reference from a prospectus or listing particulars), a statement that it is included, in the form and context in which it is included, with the consent of that person.

LR 13.6.2 R RP

For the purposes of the statement by the board referred to in LR 13.6.1R (5):

  1. (1)

    any director who is, or an associate of whom is, the related party, or who is a director of the related party should not have taken part in the board's consideration of the matter; and

  2. (2)

    the statement should specify that such persons have not taken part in the board's consideration of the matter.

LR 13.6.3 G RP

For the purpose of advising the directors under LR 13.6.1R (5), an independent adviser may take into account but not rely on commercial assessments of the directors.

Pro forma financial information1

LR 13.6.4 G RP

1 LR 13.3.3 R sets out requirements for pro forma information in related party circulars.

LR 13.7 Circulars about purchase of own equity securities

Purchase of own equity securities

LR 13.7.1 R RP
  1. (1)

    A circular relating to a resolution proposing to give the company authority to purchase its own equity securities must also include:

    1. (a)

      if the authority sought is a general one, a statement of the directors' intentions about using the authority;

    2. (b)

      if known, the method by which the company intends to acquire its equity shares and the number to be acquired in that way;

    3. (c)

      a statement of whether the company intends to cancel the equity shares or hold them in treasury;

    4. (d)

      if the authority sought related to a proposal to purchase from specific parties, a statement of the names of the persons from whom equity shares are to be acquired together with all material terms of the proposal;

    5. (e)

      details about the price, or the maximum and minimum price, to be paid; and

    6. (f)

      the total number of warrants and options to subscribe for equity shares that are outstanding at the latest practicable date before the circular is published and both the proportion of issued share capital (excluding treasury shares) that they represent at that time and will represent if the full authority to buyback shares (existing and being sought) is used.

  2. (2)

    If the exercise in full of the authority sought would result in the purchase of 25% or more of the company's issued equity shares (excluding treasury shares) the circular must also include the following information referred to in the PD Regulation2:

    2
    1. (a)

      Annex 1 item 4 – Risk factors;

    2. (b)

      Annex 1 item 12 – Trend information;

    3. (c)

      Annex 1 item 17.2 – Director's interests in shares;

    4. (d)

      Annex 1 item 18.1 – Major interests in shares;

    5. (e)

      Annex 1 item 20.9 – Significant changes;

    6. (f)

      Annex 3 item 3.1 – Working capital (this must be based on the assumption that the authority sought will be used in full at the maximum price allowed and this assumption must be stated). This information is not required to be included in a circular issued by a closed-ended investment fund.1

Pro forma financial information2

LR 13.7.2 G RP

2 LR 13.3.3 R sets out requirements for pro forma information in a circular relating to the purchase by the company of 25% or more of the company's issued equity shares (excluding treasury shares).

LR 13.8 Other circulars

Authority to allot shares

LR 13.8.1 R RP

A circular relating to a resolution proposing to grant the directors' authority to allot relevant securities must include:

  1. (1)

    a statement of the maximum amount of relevant securities which the directors will have authority to allot and the percentage which that amount represents of the total ordinary share capital in issue (excluding treasury shares) as at the latest practicable date before publication of the circular;

  2. (2)

    a statement of the number of treasury shares held by the company as at the date of the circular and the percentage which that amount represents of the total ordinary share capital in issue (excluding treasury shares) as at the latest practicable date before publication of the circular;

  3. (3)

    a statement by the directors as to whether they have any present intention of exercising the authority, and if so for what purpose; and

  4. (4)

    a statement as to when the authority will lapse.

Disapplying pre-emption rights

LR 13.8.2 R RP

A circular relating to a resolution proposing to disapply the statutory pre-emption rights under section 892 of the Companies Act 19852 (Existing shareholders' right of pre-emption)1 must include:

1 2 2
  1. (1)

    a statement of the maximum amount of equity securities which the disapplication will cover; and

  2. (2)

    if there is a general disapplication for equity securities for cash made otherwise than to existing shareholders in proportion to their existing holdings, the percentage which the amount generally disapplied represents of the total ordinaryshare capital in issue as at the latest practicable date before publication of the circular.

Increase in authorised share capital

LR 13.8.3 R

A circular relating to a resolution proposing to increase the company's authorised share capital must include:

  1. (1)

    a statement of the proposed percentage increase in the authorised share capital of the relevant class; and

  2. (2)

    a statement of the reason for the increase.

Reduction of capital

LR 13.8.4 R RP

A circular relating to a resolution proposing to reduce the company's capital must include a statement of the reasons for, and the effects of, the proposal.

Capitalisation or bonus issue

LR 13.8.5 R RP
  1. (1)

    A circular relating to a resolution proposing a capitalisation or bonus issue must include:

    1. (a)

      the reason for the issue;

    2. (b)

      a statement of the last date on which transfers were or will be accepted for registration to participate in the issue;

    3. (c)

      details of the proportional entitlement; and

    4. (d)

      a description of the nature and amount of reserves which are to be capitalised.

  2. (2)

    Any timetable set out in the circular must have been approved by the RIE on which the company'sequity securities are traded.

Scrip dividend alternative

LR 13.8.6 R RP
  1. (1)

    A circular containing an offer to shareholders of the right to elect to receive shares instead of all or part of a cash dividend must include:

    1. (a)

      a statement of the total number of shares that would be issued if all eligible shareholders were to elect to receive shares for their entire shareholdings, and the percentage which that number represents of the equity shares (excluding treasury shares) in issue at the date of the circular;

    2. (b)

      in a prominent position, details of the equivalent cash dividend foregone to obtain each share or the basis of the calculation of the number of shares to be offered instead of cash;

    3. (c)

      a statement of the total cash dividend payable and applicable tax credit on the basis that no elections for the scrip dividend alternative are received;

    4. (d)

      a statement of the date for ascertaining the share price used as a basis for calculating the allocation of shares;

    5. (e)

      details of the proportional entitlement;

    6. (f)

      details of what is to happen to fractional entitlements;

    7. (g)

      the record date; and

    8. (h)

      a form of election relating to the scrip dividend alternative which:

      1. (i)

        is worded so as to ensure that shareholders must elect positively in order to receive shares instead of cash; and

      2. (ii)

        includes a statement that the right is non-transferable.

  2. (2)

    Any timetable set out in the circular must have been approved by the RIE on which the company'sequitysecurities are traded.

Scrip dividend mandate schemes/dividend reinvestment plans

LR 13.8.7 R RP
  1. (1)

    A circular relating to any proposal where shareholders are entitled to complete a mandate in order to receive shares instead of future cash dividends must include:

    1. (a)

      the information in LR 13.8.6R (1)(d) and (f)1;

      1
    2. (b)

      the basis of the calculation of the number of shares to be offered instead of cash;

    3. (c)

      a statement of last date for lodging notice of participation or cancellation in order for that instruction to be valid for the next dividend;

    4. (d)

      details of when adjustment to the number of shares subject to the mandate will take place;

    5. (e)

      details of when cancellation of a mandate instruction will take place;

    6. (f)

      a statement of whether or not the mandate instruction must be in respect of a shareholder's entire holding;

    7. (g)

      the procedure for notifying shareholders of the details of each scrip dividend; and

    8. (h)

      a statement of the circumstances, if known, under which the directors may decide not to offer a scrip alternative in respect of any dividend.

  2. (2)

    The timetable in the circular for each scrip alternative covered by a scrip dividend mandate plan must have been approved by the RIE on which the company'sequity securities are traded.

Notices of meetings

LR 13.8.8 R RP
  1. (1)

    When holders of listedequity securities are sent a notice of meeting which includes any business, other than ordinary business at an annual general meeting, an explanatory circular must accompany the notice. If the other business is to be considered at or on the same day as an annual general meeting, the explanation may be incorporated in the directors' report.

  2. (2)

    A circular or other document convening an annual general meeting at which only ordinary business is to be conducted and, if applicable, any other matter covered by this section is to be considered or proposed, need not be submitted to the FSA for prior approval if, for the other matter to be considered or proposed, the circular or other document complies with the relevant provisions of this section.

  3. (3)

    A circular or other document convening an annual general meeting where only ordinary business is proposed does not need to comply with LR 13.3.1R (4), (5) and (6)1.

    1
LR 13.8.9 G RP

A circular or other document convening an annual general meeting where special business is proposed will need to comply with all of LR 13.3.1 R (including paragraphs (4), (5) and (6) 1in respect of special business).

1

Amendments to constitution

LR 13.8.10 R RP

A circular to shareholders about proposed amendments to the constitution must include:

  1. (1)

    an explanation of the effect of the proposed amendments; and

  2. (2)

    either the full terms of the proposed amendments, or a statement that the full terms will be available for inspection:

    1. (a)

      from the date of sending the circular until the close of the relevant general meeting at a place in or near the City of London or such other place as the FSA may determine; and

    2. (b)

      at the place of the general meeting for at least 15 minutes before and during the meeting.

Employees' share scheme etc

LR 13.8.11 R RP

A circular to shareholders about the approval of an employee'sshare scheme or long-term incentive scheme must:

  1. (1)

    include either the full text of the scheme or a description of its principal terms;

  2. (2)

    include, if directors of the listed company are trustees of the scheme, or have a direct or indirect interest in the trustees, details of the trusteeship or interest;

  3. (3)

    state that the provisions (if any) relating to:

    1. (a)

      the persons to whom, or for whom, securities, cash or other benefits are provided under the scheme (the "participants");

    2. (b)

      limitations on the number or amount of the securities, cash or other benefits subject to the scheme;

    3. (c)

      the maximum entitlement for any one participant; and

    4. (d)

      the basis for determining a participant's entitlement to, and the terms of, securities, cash or other benefit to be provided and for the adjustment thereof (if any) if there is a capitalisation issue, rights issue or open offer, sub-division or consolidation of shares or reduction of capital or any other variation of capital;

    cannot be altered to the advantage of participants without the prior approval of shareholders in general meeting (except for minor amendments to benefit the administration of the scheme, to take account of a change in legislation or to obtain or maintain favourable tax, exchange control or regulatory treatment for participants in the scheme or for the company operating the scheme or for members of its group);

  4. (4)

    state whether benefits under the scheme will be pensionable and, if so, the reasons for this; and

  5. (5)

    if the scheme is not circulated to shareholders, include a statement that it will be available for inspection:

    1. (a)

      from the date of sending the circular until the close of the relevant general meeting at a place in or near the City of London or such other place the FSA may determine; and

    2. (b)

      at the place of the general meeting for at least 15 minutes before and during the meeting.

LR 13.8.12 R RP

The resolution contained in the notice of meeting accompanying the circular must refer either to:

  1. (1)

    the scheme itself (if circulated to shareholders); or

  2. (2)

    the summary of its principal terms included in the circular.

LR 13.8.13 R RP

The resolution approving the adoption of an employees' share scheme or long-term incentive scheme may authorise the directors to establish further schemes based on any scheme which has previously been approved by shareholders but modified to take account of local tax, exchange control or securities laws in overseas territories, provided that any shares made available under such further schemes are treated as counting against any limits on individual or overall participation in the main scheme.

Amendments to employees' share scheme etc

LR 13.8.14 R RP

A circular to shareholders about proposed amendments to an employees' share scheme or a long-term incentive scheme must include:

  1. (1)

    an explanation of the effect of the proposed amendments; and

  2. (2)

    the full terms of the proposed amendments, or a statement that the full text of the scheme as amended will be available for inspection.

Discounted option arrangements

LR 13.8.15 R RP

If shareholders' approval is required by LR 9.4.4 R, the circular to shareholders must include the following information:

  1. (1)

    details of the persons to whom the options, warrants or rights are to be granted; and

  2. (2)

    a summary of the principal terms of the options, warrants or rights.

Reminders of conversion rights

LR 13.8.16 R RP
  1. (1)

    A circular to holders of listed securities convertible into shares reminding them of the times when conversion rights are exercisable must include:

    1. (a)

      the date of the last day for lodging conversion forms and the date of the expected sending of the certificates;

    2. (b)

      a statement of the market values for the securities on the first dealing day in each of the six months before the date of the circular and on the latest practicable date before sending the circular;

    3. (c)

      the basis of conversion in the form of a table setting out capital and income comparisons;

    4. (d)

      a brief explanation of the tax implications of conversion for holders resident for tax purposes in the United Kingdom;

    5. (e)

      if there is a trustee, or other representative, of the securities holders to be redeemed, a statement that the trustee, or other representative, has given its consent to the issue of the circular or stated that it has no objection to the resolution being put to a meeting of the securities holders;

    6. (f)

      reference to future opportunities to convert and whether the terms of conversion will be the same as or will differ from those available at present, or, if there are no such opportunities, disclosure of that fact;

    7. (g)

      reference to letters of indemnity, for example, if certificates have been lost;

    8. (h)

      if power exists to allot shares issued on conversion to another person, reference to forms of nomination; and

    9. (i)

      a statement as to whether holders exercising their rights of conversion will retain the next interest payment due on the securities.

  2. (2)

    The circular must not contain specific advice as to whether or not to convert the securities.

LR 13 Annex 1 Class 1 circulars

R

The following table identifies (by reference to certain paragraphs of Annex 1 and Annex 3 of the PD Regulation) the additional information required to be included in a class 1 circular relating to the listed company and the undertaking the subject of the transaction.

Information

Listed Company

Undertaking the subject of the transaction

Annex 1 item 4 – Risk factors

*

*

Annex 1 item 5.1.1 – Company name

*

Annex 1 item 5.1.4 – Company address

*

Annex 1 item 12 – Trend information

*

*

Annex 1 item 16.2 – Service contracts

*

Annex 1 item 17.2 – Director's interests in shares

*

Annex 1 item 18.1 – Major interests in shares

*

Annex 1 item 19 – Related party transactions

*

Annex 1 item 20.8 – Litigation

*

*

Annex 1 item 20.9 – Significant changes

*

*

Annex 1 item 22 – Material contracts

*

*

Annex 1 item 24 – Documents on display

*

Annex 3 item 3.1 – Working capital

*

*

LR 13 Annex 1.1

1

The information required by this Annex must be presented as follows:

(1)

the information required by Annex 1 item 22 (material contracts), Annex 1 item 20.8 (litigation) and Annex 1 item 20.9 (significant change)

(a)

for an acquisition, in separate statements for the listed company and its subsidiary undertakings and for the undertaking, business or assets to be acquired; or

(b)

for a disposal, in separate statements for the listed company and its subsidiary undertakings (on the basis that the disposal has taken place), and for the undertaking, business or assets to be disposed of;

(2)

the information required by Annex 3 item 3.1 (working capital) and, if relevant Annex 1 item 12 (trend information):

(a)

in the case of an acquisition, in a single statement for the listedcompany and its subsidiary undertakings (on the basis that the acquisition has taken place); or

(b)

in the case of a disposal, in a single statement for the listed company and its subsidiary undertakings (on the basis that the disposal has taken place).

2

In determining what information is required to be included by virtue of Annex 1 item 22 (material contracts) if a prospectus or listing particulars are not required, regard should be had to whether information about that provision is information which securities holders of the issuer would reasonably require for the purpose of making a properly informed assessment about the way in which to exercise the voting rights attached to their securities or the way in which to take any other action required of them related to the subject matter of the circular.

3

The information required by this Annex is modified as follows:

(1)

if the listed company is issuing shares for which listing is sought, the information regarding major interests in shares (Annex 1 item 18.1) and directors' interests in shares (Annex 1 item 17.2) must be given for the share capital both as existing and as enlarged by the shares for which listing is sought;

(2)

information required by Annex 1 item 19 (related party transactions) and Annex 1 item 16.2 (directors' service contracts) does not need to 2be given if it has already been published before the circular is sent; and

2

(3)

information referred to in Annex 3 item 3.1 (Working capital) is not required to be included in a class 1 circular published by a closed-ended investment fund.1

1