In July 2010, the UK Listing Authority published the 25th edition of LIST! This edition covers a range of topics including those set out below.

UKLA's new approach to reverse takeovers

There is a rebuttable presumption under LR 10.6.3G (Suspended listing) that an issuer's shares will be suspended upon the announcement or leak of a reverse takeover. The FSA's previous position was that they would normally require suspension under LR 5.1.1R(1) (FSA may suspend listing) until such time as audited financial information on the target business was available together with a confirmation that the issuer will continue to keep the market informed, without delay, of any developments concerning the target business. The rationale for this approach was that, in the case of a reverse takeover, the target business will form the majority of the enlarged group – as a result, the market needs sufficient information on the target business to properly price the issuer's securities.

The FSA have now accepted that this approach is too onerous and that in future the minimum level of information required to avoid a listing suspension will include:

  • financial information on the whole target business covering a period of three years. Whilst this information will no longer need to be audited, the directors of the issuer will need to confirm that it provides sufficient information to enable an assessment of the financial position of the target business to be made;
  • a private comfort letter from the sponsor confirming the sufficiency of the information about the target business;
  • any key differences between the issuer's current accounting policies and the policies used to present the financial information on the target business;
  • any key non-financial performance indicators relating to the target business;
  • a full commentary on current trading by the target business; and
  • a commitment by the issuer to announce, without delay, any material developments concerning the target business.

The FSA does however retain the right to over-ride the issuer's and sponsor's view that sufficient information about the target business has been provided and to suspend the issuer's securities should the FSA subsequently determine that the market is no longer operating on a properly informed basis.

UKLA approach to break fees

In light of recent increased use of arrangements which serve a similar purpose to a conventional break fee, the FSA reminds issuers that a crucial part of the test (under LR 10.2.7R) for determining whether an arrangement comprises a break fee is whether the issuer will become obliged to make a payment to a counterparty to a failed transaction. This test should be applied irrespective of the particular arrangement. If the arrangement has been structured to replicate the effect of a break fee, or to serve the same purpose as a break fee, it will be subject to LR 10.2.7R.

The remaining topics covered by LIST! 25 are:

  • three year track record for eligibility;
  • classifying joint venture arrangements;
  • assessing whether an item is exceptional for the profits test;
  • the advertisement provisions under the Prospectus Directive
  • VCT board independence rules;
  • practitioners' guides to listing retail and wholesale debt;
  • listing applications – final terms;
  • listing regime review;
  • report to the Treasury on implementing the Rights Issue Review Group's recommendations; and
  • NYSE Euronext London.

View List! 25 (8 page pdf).