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LR 6.5 Controlling shareholders

LR 6.5.1RRP

1An applicant with a controlling shareholder must demonstrate that, despite having a controlling shareholder, the applicant is able to carry on an independent business as its main activity.

LR 6.5.2GRP

1LR 6.5.1R is intended to ensure that the protections afforded to holders of equity shares by the premium listing requirements are meaningful.

LR 6.5.3GRP

1Factors that may indicate that an applicant does not satisfy the requirement in LR 6.5.1R (even where the agreement in LR 6.5.4R is in place) include:

  1. (1)

    an applicant 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 a controlling shareholder’s group; or

  2. (2)

    a controlling shareholder (or any associate thereof) appears to be able to influence the operations of the applicant outside its normal governance structures or via material shareholdings in one or more significant subsidiary undertakings; or

  3. (3)

    a controlling shareholder appears to be able to exercise improper influence over the applicant; or

  4. (4)

    an applicant cannot demonstrate that it has access to financing other than from a controlling shareholder (or an associate thereof).

LR 6.5.4RRP

1An applicant with a controlling shareholder upon admission must have in place a written and legally binding agreement with its controlling shareholder which is intended to ensure that the controlling shareholder complies with undertakings that:

  1. (1)

    transactions and arrangements with the controlling shareholder (and/or any of its associates) will be conducted at arm’s length and on normal commercial terms;

  2. (2)

    neither the controlling shareholder nor any of its associates will take any action that would have the effect of preventing the applicant from complying with its obligations under the listing rules; and

  3. (3)

    neither the controlling shareholder nor any of its associates will propose or procure the proposal of a shareholder resolution which is intended or appears to be intended to circumvent the proper application of the listing rules.

LR 6.5.5RRP

1An applicant with more than one controlling shareholder is not required to enter into a separate agreement with each controlling shareholder if:

  1. (1)

    the applicant reasonably considers, in light of its understanding of the relationship between the relevant controlling shareholders, that a controlling shareholder can procure the compliance of another controlling shareholder and that controlling shareholder’s associates with the undertakings in LR 6.5.4R; and

  2. (2)

    the agreement, which contains the undertakings in LR 6.5.4R, entered into with the relevant controlling shareholder also contains:

    1. (a)

      a provision in which the controlling shareholder agrees to procure the compliance of a non-signing controlling shareholder and its associates with the undertakings in LR 6.5.4R; and

    2. (b)

      the name of such non-signing controlling shareholder.