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Requirements for an offering and listing in the U.K., U.S. or Hong Kong

Requirements for an offering and listing in the U.K., U.S. or Hong Kong

United Kingdom United States Hong Kong
Premium Listing Standard Listing
Merger and Acquisition Regulation:
  • Takeover Code. Applies to listed Companies incorporated in the U.K. and Channel Islands. Similar rules apply to companies incorporated in other EU jurisdictions by virtue of the EU Takeover Directive (in some cases, the U.K. Takeover Code may apply in part to such companies if their sole listing is in the U.K.). Not a legal requirement for other companies, although institutional investors may prefer listed companies incorporated outside the U.K./EU to adopt similar provisions in the Company’s articles or by laws to ensure equal treatment of shareholders (though not customary for DR issuers)
  • U.K. Companies Act. Not applicable to non-U.K. companies although premium listed companies must include pre-emption rights equivalent to the U.K. Companies Act in their charter and are subject to restrictions on raising new capital on a non-pre-emptive basis
  • Tender offer rules. U.S. tender offer rules apply if > 10% of shares are held by U.S. persons. These rules regulate communications, disclosure, timing, withdrawal, equal treatment of shareholders and responses by a target corporation in a tender offer
  • No securities law pre-emptive rights apply to future issuances of stock for cash
  • No securities law approval requirements for significant transactions
  • Issuance of stock in M&A transactions may require SEC registration, unless exempt, and shareholder approval under NYSE rules for major issuances
  • Transactions with the Company must comply with the Takeovers Code
  • Also please see Exhibit A in respect of notifiable transactions
Disclosure of Price Sensitive Information Post-Offering / Listing:
  • Inside Information – must disclose “inside information” through market announcements service “as soon as possible”
  • Can delay publication of “inside information” in very limited circumstances (negotiations, prejudice to Company’s legitimate interests), but only where no danger of the information leaking
  • Selective disclosure of “inside information” only permitted in very limited circumstances (not, for example, to analysts)
  • Whatever information is made public in home jurisdiction, to the extent it is “inside information”, must also be simultaneously released in London
  • Must maintain “insider” lists of those with access to the Company’s inside information
  • Need internal systems and controls to enable compliance with all the above
  • Form 6-K – must be filed with the SEC upon disclosure in home jurisdiction of material information
  • Rule 10b-5 generally restricts selective disclosure or insider trading by the Company or its directors and senior officers

Obligation to disclose inside information – The Company must, as soon as reasonably practicable after any inside information has come to its knowledge, disclose the information to the public.

General obligation of disclosure – Where the Exchange considers that there is or is likely to be a false market in the Company’s securities, the Company must, as soon as reasonably practicable after consultation with the Exchange, announce the information necessary to avoid a false market in its securities.

Other Continuing Obligations Post-Offering / Listing:
  • Shareholdings – Disclose changes in significant shareholdings (thresholds of 3% and every 1% thereafter)
  • Share Dealings – Disclose dealings by directors or persons discharging managerial responsibilities (“PDMRs”)
  • Model Code – Directors and PDMRs must comply with the “Model Code” on share dealings, which sets blackout periods and other restrictions on dealings
  • Significant transactions: based on “class tests”:
    • Any class 1 transaction – where the consideration, gross assets, profits, reserves or gross capital (or proven and probable reserves for a mineral company) of the target equals or exceeds 25% of the equivalent measure in the company – or reverse takeover requires preparation of a circular approved by The Financial Conduct Authority (“FCA”) and obtaining of shareholder approval
    • Class 2 transactions (where the ratio exceeds 5% but is less than 25%) must be announced
  • Related Party Transactions ‑ require notification, confirmation that the transaction is fair and reasonable (as advised by a sponsor) and, for larger transactions, shareholder approval, subject to de minimis exceptions
  • Share Buybacks: The purchase by the Company of its own securities is proscribed during any prohibited period (periods prior to the publication of financial results), and the purchase of equity shares must be made by tender offer unless the offer relates to less than 15% of outstanding shares of that class (or the full terms have been specifically approved by shareholders) and the offer price is within a prescribed price range determined by reference to recent LSE trading prices. Safe harbour from Market Abuse Rules also available for share repurchases
  • Shareholdings – For companies with a share listing, disclose significant shareholdings (see “Premium Listings” opposite, with non-UK standard listed companies required to disclose at thresholds of 5%, 10%, 15%, 20%, 25%, 30%, 50% and 75% ). These rules are not mandatory for companies with a DR listing
  • Share Dealings – For companies with a share listing, disclose dealings by directors or PDMRs (see “Premium Listings” opposite). These rules are not mandatory for companies with a DR listing although are sometimes observed
  • Filing requirements for changes to charter and notifications of changes in capital
  • Not required to comply with “Model Code” on share dealings, but often followed as measure of best practices since the market abuse regime applies to dealings in listed DRs
  • No specific rules on buybacks of DRs although market abuse considerations apply and companies will often seek to follow the safe harbour available for share buybacks
  • Internal control and “anti-bribery” laws – listed companies are subject to the internal control requirements and restrictions on unlawful payments to foreign governmental officials contained in the U.S. Foreign Corrupt Practices Act and other Exchange Act provisions
  • Auditor Independence – strict requirements to ensure auditor independence
  • Attorney Reporting Requirements – the Company’s attorneys (outside and inside counsel) may be required to report any evidence of a material violation of securities laws, a breach of fiduciary duty or a similar violation by the Company or its directors, officers or employees “up the ladder” within the Company, including to the CEO and the Board
  • Prohibition on Loans – the Company cannot directly or indirectly make loans (or extend credit of any kind) to a director or executive officer
  • Disgorgement of Bonuses and Other Incentive Compensation if the Company is forced to restate financials
  • Blackout Periods on trading by insiders during employee benefit plan blackout periods
  • NYSE reporting – NYSE requires timely disclosure of material information that may affect the market for the Company’s securities
  • Response to HKSE’s enquiries – Companies must respond promptly to any enquiries from the HKSE
  • Disclosure of notifiable transactions, connected transactions, takeovers and share purchases as required by Chapters 14 and 14A of the Listing Rules – please refer to Exhibits A and B
  • Sufficient operations – Companies must maintain sufficient operations or have assets of sufficient value to warrant the continued listing of the Company’s shares
  • Public float – Companies must maintain the prescribed public float
  • Pre-emptive rights – Companies must obtain shareholders’ consent before issuing securities
  • Comply with rules relating to shareholder and board meetings
  • Comply with rules relating to distribution of financial information
  • Review of documents –Companies must submit announcements, circulars and other shareholder or public communications to the HKSE for review if they fall within the scope of the Listing Rules
  • Material change in the nature of the Company’s business –within the first 12 months after the listing date, the Company cannot make any acquisition or disposal which would result in a fundamental change in its principal business activities as described in the Prospectus, unless the circumstances are exceptional and prior approval of the independent shareholders has been obtained


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