A company with, or applying for, a primary listingof its equity securities must comply with LR 8.2 (When a sponsor must be appointed or its assistance obtained) and LR 8.5 (Responsibilities of listed companies).
A company with, or applying for, a primary listing of its equity securities must appoint a sponsor on each occasion that it:
makes an application for admission of equity securities which:
requires the production of a prospectus; or
is accompanied by a certificate of approval from another competent authority; or
is accompanied by a summary document as required by PR 1.2.3R (8); or
is required to producea class 1 circular; or
is producinga circular that proposes a reconstruction or a refinancing which does not constitute a class 1 transaction; or
is producinga circular for the proposed purchase of own shares::
which does not constitute a class 1 circular; and
is required by LR 13.7.1R (2) to include a working capital statement; or
is required to do so by the FSA because it appears to the FSA that there is, or there may be, a breach of the listing rules or the disclosure rules and transparency rules
by the listed company.
If a listed company is proposing to enter into a transaction which due to its size or nature could amount to a class 1 transaction or a reverse takeover it must obtain the guidance of a sponsor to assess the application of LR 10.
If a listed company is proposing to enter into a transaction which is, or may be, a related party transaction it must obtain the guidance of a sponsor in order to assess the application of LR 11.
Where a sponsor has been appointed under LR 8.2 by a listed company or an applicant, a sponsor must:
provide assurance to the FSA when required that the responsibilities of the listed company or applicant under the listing rules have been met; and
guide the listed company or applicant in understanding and meeting its responsibilities under the listing rules anddisclosure rules and transparency rules.
A sponsor will be the main point of contact with the FSA for any matter where the sponsor has been appointed by a listed company or applicant. The FSA expects to discuss all issues relating to a transaction and any draft or final document directly with the sponsor. However, in appropriate circumstances, the FSA will communicate directly with the listed company or applicant.
A sponsor must provide:
any service as set out in LR 8.4; or
any assurance, guidance or advice to a listed company or applicant in relation to the application or interpretation of the listing rules and disclosure rules and transparency rules;
with due care and skill.
Where a sponsor gives any guidance or advice to a listed company or applicant in relation to the application or interpretation of the listing rules or disclosure rules and transparency rules, the sponsor must take reasonable steps to satisfy itself that the director or directors of the listed company understand the nature and extent oftheir responsibilities under the listing rules and disclosure rules and transparency rules.
A sponsor must:
deal with the FSA in an open and co-operative way;
deal with all enquiries raised by the FSA promptly.; and
disclose to the FSA in a timely manner any material information relating to the sponsor or to a listed company or applicant of which it has knowledge which addresses non-compliance with the listing rules or disclosure rules and transparency rules.
A sponsor must be independent of the listed company or applicant where a sponsor provides any service, assurance, guidance or advice and in any event must not act if the sponsor or another company in the sponsor'sgroup has:
an interest in, or a holding that is referenced to, 30% or more of the equity shares of the listed company or applicant or any other company in that company'sgroup; or
a significant interest in the debt securities of a listed company or applicant or any other company in that company'sgroup; or
a business relationship with, or financial interest in the listed company or applicant or any other company in the listedcompany'sgroup that would give the sponsor or the sponsor'sgroup a material interest in the outcome of the transaction.
Any interest that arises as a result of the sponsor's discretionary client holdings is not to be included in the determination of the threshold set out in LR 8.3.6R (1)(a).
A sponsor will not be independent of a listed company or applicant if a director, partner or employee of the sponsor or another company in the sponsor'sgroup:
is involved in the provision of sponsor services; and
has a material interest in the listed company or applicant or any other company in that company'sgroup.
A sponsor and the sponsor'sgroup should have a sufficient degree of independence from the listed company or applicant and from the transaction so that the role of the sponsor can be discharged in a way that will not:
affect the outcome of the transaction; or
affect the nature of the advice given to the listed company or applicant; or
be perceived to have affected either the outcome of the transaction or the nature of the advice given to the listed company or applicant.
In cases where a company in, or an employee of, the sponsor'sgroup has an interest or a relationship that may be perceived to cause a conflict it may be possible to demonstrate to the FSA that adequate separation exists in respect of the transaction.
LR 8.4.2 R to LR 8.4.6 R apply in relation to an application for admission of equity securities if an applicant does not have equity securities already listed and:
the production of a prospectus is required; or
the application is accompanied by a certificate of approval from another competent authority; or
the application is accompanied by a summary document as required byPR 1.2.3R (8).
A sponsor must not submit to the FSA an application on behalf of an applicant, in accordance with LR 3, unless it has come to a reasonable opinion, after having made due and careful enquiry, that:
the applicant has satisfied all requirements of the listing rules relevant to an application for admission to listing;
the applicant has satisfied all applicable requirements set out in the prospectus rules unless the home Member State of the applicant is not, or will not be, the United Kingdom;
the directors of the applicant have established procedures which enable the applicant to comply with the listing rules and the disclosure rules and transparency rules on an ongoing basis;
the directors of the applicant have established procedures which provide a reasonable basis for them to make proper judgments on an ongoing basis as to the financial position and prospects of the applicant and its group; and
the directors of the applicant have a reasonable basis on which to make the working capital statement required by LR 6.1.16 R.
A sponsor must:
submit a completed Sponsor's Declaration on an Application for Listing to the FSA either:
on the day the FSA is to consider the application for approval of the prospectus and prior to the time the prospectus is approved; or
at a time agreed with the FSA, if the FSA is not approving the prospectus;
submit a completed a Shareholder Statement or a Pricing Statement, as applicable, to the FSA by 9 a.m. on the day the FSA is to consider the application;
ensure that all matters known to it which, in its reasonable opinion, should be taken into account by the FSA in considering:
the application for listing; and
whether the admission of the equity shares would be detrimental to investors' interests;
have been disclosed with sufficient prominence in the prospectus or otherwise in writing to the FSA; and
submit a letter to the FSA setting out how the applicant satisfies the criteria in LR 2 (Requirements for listing - all securities) and LR 6 (Additional requirements for listing for equity securities) no later than when the first draft of the prospectus is submitted (or, if the FSA is not approving a prospectus, at a time to be agreed with the FSA).
[Note: the Sponsor's Declaration on an Application for Listing, the Shareholder Statement and the Pricing Statement forms can be found on the UKLA section of the FSA website.]
Depending on the circumstances of the case, a sponsor providing services to an applicant on an application for admission to listing may have to confirm in writing to the FSA that the board of the applicant has allotted the equity securities.
[Note: see LR 3.3.4 R]
A sponsor must:
ensure that no equity shares are placed with connected clients of the sponsor or of any securities house or other intermediary assisting with the offer, unless placed with a market maker or fund manager for the purpose of its business as such;
ensure that the results of any marketing, including the basis of allotment where applicable, are notified to a RIS before admission is expected to become effective; and
ensure that if, after an offer for sale, offer for subscription, placing or intermediaries offer, any of the listed company's advisers or any intermediary becomes interested in 3% or more of any class of equity shares being marketed (calculated exclusive of treasury shares) the interest is notified to a RIS before admission is expected to become effective.
For the purposes of LR 8.4.5R (3) an adviser or intermediary:
will usually be regarded as having an interest if any market maker in the group of companies to which the adviser or intermediary belongs holds any equity shares of the applicant; and
will not have an interest if the holding of the market maker arises solely from holdings of equity shares held on behalf of clients.
In assessing the percentage size of the interest, the equity shares being marketed are to be treated as having already been issued.
LR 8.4.8 R to LR 8.4.10 G apply in relation to an application for admission of equity securities of an applicant that has equity securities already listed.
A sponsor must not submit to the FSA an application on behalf of an applicant, in accordance with LR 3 (Listing applications), unless it has come to a reasonable opinion, after having made due and careful enquiry, that:
the applicant has satisfied all requirements of the listing rules relevant to an application for admission to listing;
the applicant has satisfied all applicable requirements set out in the prospectus rules unless the home Member State of the applicant is not, or will not be, the United Kingdom; and
the directors of the applicant have a reasonable basis on which to make the working capital statement required by LR 6.1.16 R.
A sponsor must:
submit a completed Sponsor's Declaration on an Application for Listing to the FSA either:
on the day the FSA is to consider the application for approval of the prospectus and prior to the time the prospectus is approved; and
at a time agreed with the FSA if the FSA is not approving the prospectus;
submit a completed Shareholder Statement or aPricing Statement, as applicable, to the FSA by 9 a.m. on the day the FSA is to consider the application; and
ensure that all matters known to it which, in its reasonable opinion, should be taken into account by the FSA in considering the application for listing have been disclosed with sufficient prominence in the prospectus or otherwise in writing to the FSA.
Note: The Sponsor's Declaration on an Application for Listing, the Shareholder Statement and the Pricing Statement forms can be found on the UKLA section of the FSA's website.
Depending on the circumstances of the case, a sponsor providing services to an applicant on an application for admission to listing may have to confirm in writing to the FSA that the board of the applicant has allotted the securities. [Note: see LR 3.3.4 R]
LR 8.4.12 R to LR 8.4.13 R apply in relation to transactions involving a listed company of equity shares with a primary listing that:
is required to produce a class 1 circular;
is producing a circular that proposes a reconstruction or a re-financing which does not constitute a class 1 transaction; or
is producing a circular for the proposed purchase of own shares;
which does not constitute a class 1 circular; and
is required by LR 13.7.1R (2) to include a working capital statement.
A sponsor must not submit to the FSA, on behalf of a listed company, an application for approval ofa circular regarding a transaction set out in LR 8.4.11 R, unless the sponsor has come to a reasonable opinion, after having made due and careful enquiry, that:
the listed company has satisfied all requirements of the listing rules relevant to the production of a class 1 circular or other circular;
the transaction will not have an adverse impact on the listed company's ability to comply with the listing rules or the disclosure rules and transparency rules; and
the directors of the listed company have a reasonable basis on which to make the working capital statement required by LR 9.5.12 R, LR 13.4.1 R or LR 13.7.1 R.
A sponsor acting on a transaction falling within LR 8.4.11 R must:
submit a completed Sponsor's Declaration for the Production of a Circular to the FSA on the day the circular is to be approved by the FSA and prior to the time the circular is approved;
submit a completed Pricing Statement, if applicable, to the FSA by 9 a.m on the day the FSA is to consider the application; and
ensure that all matters known to it which, in its reasonable opinion, should be taken into account by the FSA in considering the transaction have been disclosed with sufficient prominence in the documentation or otherwise in writing to the FSA.
Note: The Sponsor's Declaration for the Production of a Circular and the Pricing Statement forms can be found on the UKLA section of the FSA website.
A listed company or applicant must inform the FSA promptly of the name and contact details of asponsor appointed in accordance with the listing rules.
A listed company or applicant must notify the FSA in writing immediately of the resignation or dismissal of any sponsor that it had appointed.
In the case of a dismissal, the reasons for the dismissal must be included in the notification.
The notification must be copied to the sponsor.
Where a listed company or applicant appoints more than one sponsor , the company must:
ensure that one of the sponsors that is appointed:
takes primary responsibility for contact with the FSA in respect of the entire application or transaction; and
appoints a suitably experienced employee, whose name appears on the list described in LR 8.6.15 R to liaise with the FSA; and
inform the FSA, in writing, of the name and contact details of the sponsor taking responsibility under LR 8.5.3R (1)(a).
The appointment of more than one sponsor does not relieve any of the sponsors so appointed of their obligations under the listing rules.
Where a listed company or applicant appoints more than one sponsor in relation to a transaction, the FSA will consider all sponsors so appointed as jointly responsible for compliance with the listing rules.
The FSA will maintain a list of sponsors on its website.
A person wanting to provide services as a sponsor , and to be included on the list of sponsors, must apply to the FSA for approval as a sponsor by submitting the following to the Sponsor Supervision Team at the FSA address:
a completed Sponsor Firm Application Form;
completed Sponsor Employee Application Forms; and
[Note: The Sponsor's Firm Application Form and the Sponsor Employee Application Formcan be found on the UKLA section of the FSA's website.]
When considering an application for approval as a sponsor the FSA may:
carry out any enquiries and request any further information which it considers appropriate, including consulting other regulators;
request that the applicant or its specified representative answer questions and explain any matter the FSA considers relevant to the application;
take into account any information which it considers appropriate in relation to the application; and
request that any information provided by the applicant is verified in such a manner as the FSA may specify.
[Note: The decision-making procedures that the FSA will follow when isconsiders whether to refuse an application for approval as a sponsor are set out in DEC.]
The FSA will approve a person as a sponsor only if it is satisfied that the person is:
an authorised person or a member of a designated professional body;
competent to perform the services set out in LR 8.2, LR 8.3 and LR 8.4; and
has adequatesystems and controls in place to ensure that it cancarry out its role as a sponsor.
A sponsor must comply, at all times, with the criteria set out in LR 8.6.5 R.
A sponsor will be competent to perform the services set out in LR 8.2, LR 8.3 and LR 8.4 if it has a broad range of relevant experience and expertise in providing advice to listed companies and on the listing rules.
In assessing the competence of a sponsor, the FSA will have regard to:
the number of suitably experienced employees retained by the sponsor, taking into account the size, number and nature of transactions undertaken and anticipated by the sponsor;
the experience of those employees who are held out to the FSA as being suitably experienced employees; and
the seniority of those suitably experienced employees.
An employee will generally be accepted as suitably experienced if he or she has recent experience providing, in a competent manner, advice and services and fulfilling all responsibilities of a sponsor in relation to a transaction when a sponsor must be appointed.
The FSA may consider, in addition to the experience described in paragraph (1), an employee's recent experience, acting in a senior capacity, providing advice and services in a competent manner on:
transactions where a prospectus is required under the Prospectus Directive; and
transactions which are similar in terms of size and complexity to those transactions set out in LR 8.2.1 R.
Recent experience would normally be demonstrated if an employee has provided advice or services:
The fewer the number of suitably experienced employees that a sponsor has, the greater the need that those employees do not rely on the same transactions to demonstrate their experience in advising on the listing rules, unless each of those employees has extensive experience in providing advice on the listing rules.
A sponsor will generally be regarded as having adequate systems and controls if there are:
clear and effective reporting lines;
effective systems and controls for the adequate supervision of employees performing any of the services set out in LR 8.2, LR 8.3 and LR 8.4;
effective systems and controls to ensure its compliance with all applicable listing rules when performing any of the services set out in LR 8.2, LR 8.3 or LR 8.4;
effective systems and controls for identifying and managing conflicts of interest; and
effective arrangements for making and retaining, for 6 years, adequate records of all matters relating to the provision of any services to a listed company or applicant.
The nature and extent of the systems and controls which a sponsor will need to maintain will depend upon a variety of factors including:
To enable it to comply with its obligation to maintain appropriate systems and controls, a sponsor should carry out an annual review of them.
A sponsor must keep an up to date list of all suitably experienced employees on whom it relies to demonstrate that it satisfies the criteria set out in LR 8.6.5 R.
A sponsor will generally be regarded as having effective systems and controls for the adequate supervision of employees if:
all employees involved in the provision of any of the services described in LR 8.2, LR 8.3 and LR 8.4 are adequately supervised by a suitably experienced employee;
all employees providing any of the services described in LR 8.2, LR 8.3 and LR 8.4 do not act beyond their proper authority;
for each transaction which requires a sponsor as set out in LR 8.2, LR 8.3 and LR 8.4, an employee, whose name is on the list required by LR 8.6.15 R:
for each transaction which requires a sponsor as set out in LR 8.2, employees who are sufficiently knowledgeable about the transaction are available to answer queries from the FSA on any business day between the hours of 8 a.m. and 6 p.m.
The FSA uses a variety of tools to monitor whether a sponsor:
continues to satisfy the criteria for approval as a sponsor as set out in LR 8.6.5 R; and
remains in compliance with all applicable listing rules.
A sponsor must provide to the FSA on an annual basis:
written confirmation that it continues to satisfy the criteria for approval as a sponsor as set out in LR 8.6.5 R;
an up to date list of employees that are suitably experienced on whom the sponsor can rely to demonstrate that it satisfies the criteria set out in LR 8.6.5 R;
for each employee whose name is on the list maintained by the sponsor under LR 8.6.15 R, details of the transactions on which the employee has acted in the previous 12 months; and
a list of transactions on which the sponsor was appointed as agent under LR 8.7.16 R, if applicable.
A sponsor must notify the FSA in writing as soon as possible if:
the sponsor ceases to satisfy the criteria for approval as a sponsor set out in LR 8.6.5 R; or
the sponsor, or any of its employees whose names are on the list maintained by the sponsor under LR 8.6.15 R, are:
any of its employees whose names are on the list maintained by the sponsor under LR 8.6.15 Rare disqualified by a court from acting as a director of a company or from acting in a management capacity or conducting the affairs of any company; or
the sponsor, or any of its employees whose names are on the list maintained by the sponsor under LR 8.6.15 R, are subject to any public criticism, regulatory intervention or disciplinary action:
by the FSA; or
by any designated professional body; or
by any body that is comparable to the FSA or a designated professional body; or
under any comparable legislation in any jurisdiction outside the United Kingdom; or
the sponsor resigns or is dismissed by a listed company or applicant, giving details of any relevant facts or circumstances;
the sponsor changes its name; or
the list of employees that are suitably experienced to enable the sponsor to demonstrate that it satisfies the criteria set out in LR 8.6.5 R is amended, either because an employee is added to or is removed from the list; or
a listed company or applicant denies the sponsor access to documents or information that have been the subject of a reasonable request by the sponsor; or
a review carried out under LR 8.6.14 G reveals any material deficiencies in the sponsor's systems and controls.
General notifications may be made in the first instance by telephone, but must be confirmed promptly in writing.
Each time a sponsor is appointed to act for a listed company or applicant as required by the listing rules it must inform the FSA as soon as possible of the name of the suitably experienced senior employee, whose name appears on the list described in LR 8.6.15 R8.7.8A, who has been appointed by the sponsor to liaise with the FSA.
Each time a sponsor is appointed to act as a sponsor as required by the listing rules it must complete a Confirmation of Independence.
The completed Confirmation of Independence must be submitted to the FSA at the same time as any documents in connection with a transaction are first submitted to the FSA.
[Note: The Confirmation of Independenceform can be found on the UKLA section of the FSA's website.]
If, after submitting a Confirmation of Independence but prior to the day of approval of the prospectus or circular, a sponsor becomes aware that it is not independent of the listed company or applicant or the transaction, it must notify the FSA immediately. The details of the lack of independence must be confirmed to the FSA in writing.
On the day of approval of the prospectus or circular:
a written confirmation that there has been no material change to the Confirmation of Independence;or
an updated Confirmation of Independence reflecting any and all changes;
must be submitted to the FSA.
The FSA will notify the sponsor of any concerns it has in relation to the sponsor's independence as soon as possible following receipt of the Confirmation of Independence as set out in LR 8.7.12 R or LR 8.7.14 R or other notification regarding the sponsor's independence.
A sponsor may not delegate any of its functions as such, except to another person on the list of sponsors.
A sponsor that delegates any of its functions under LR 8.7.16 R is not relieved of its obligations under the listing rules.
A sponsor that has been appointed as an agent by another sponsor under LR 8.7.16 R must comply with the requirements set out in LR 8.3.
A sponsor must notify the FSA in writing of:
the identity of any delegate appointed under LR 8.7.16 R; and
a detailed description of the scope of any delegation made under LR 8.7.16 R.
If the FSA considers that a sponsor has breached any provision of the listing rules and considers it appropriate to impose a sanction it will publish a statement censuring the sponsor.
A sponsor that intends to request the FSA to cancel its approval as a sponsor will need tocomply with LR 8.7.22 R.
A request by a sponsor for its approval as a sponsor to be cancelled must be in writing and must include:
the sponsor's name;
a clear explanation of the background and reasons for the request;
the date on which the sponsor requests the cancellation to take effect, after having taken into account LR 8.7.24G (2);
a signed confirmation that the sponsor will not participate in any services described in LR 8.2 as of the date the request is submitted to the FSA; and
the name and contact details of the person at the sponsor with whom the FSA should liaise with in relation to the request.
