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The admission and listing on Stock Exchange

 

Businesses trading as Public limited companies or with their company names end with Plc have the option to raise fund from the public through trading their shares on the London Stock Exchange.

However, before PLCs are allowed to trade their shares publicly they must first satisfy the admission requirements and secondly provide information which satisfies the listing particulars for listing requirements which are governed by the rules laid down in the Financial Services Authority (acting as the United Kingdom Listing Authority or UKLA).

Senior Equity Market

Public companies which satisfy the listing rules and having shares admitted to trading on the London Stock Exchange, they can be admitted to the Senior Equity Market in London which is known as the Official List.

Alternative Investment Market

There is a secondary stock market, open to smaller companies, called the Alternative Investment Market.

3 years preceding accounting records

To be admitted to listing, the company must be registered as a public company and it must intend to place on the market shares which are expected to have a market value of £700,000 or more. The company will not be admitted if it has not published or filed accounts covering the three years preceding the application for listing, and the company must have arranged for a report prepared by independent accountants covering the three preceding years to be produced.

Approved Sponsors

The directors must obviously consider that the company is financially viable and therefore a further condition for admission is that they must be satisfied that the company's working capital is sufficient. This admission requirement is satisfied by the 'approved sponsor' to the issue (usually a merchant bank or stockbroker with overall responsibility for arranging the issue) sending a letter to the UKLA stating that the directors have made careful enquiries to satisfy themselves and the sponsor that the working capital is indeed adequate. The final principal admission requirement is that it must be intended that at least 25% of any class of shares will be in the hands of the public is required by The Listing Rules.

Prospectus

If the company can satisfy the admission requirements, it must then also satisfy the listing particulars requirements. This obligation involves the company publishing listing particulars or a prospectus which complies with Chapter 5 and 6 of The Listing Rules. The range of information which must be published includes information on the shares which are to be listed, on the company and its share or loan capital, on the company's principal activities, place of business and employees, on the company's finances (in the form of balance sheet and profit and loss accounts for the last three years) and management and on trends in the company's business. The prospectus needs to include a statement that the annual accounts of the company have been audited for the last three financial years, and the people responsible for the prospectus need to make a declaration to the effect that 'to the best of their knowledge, the information given in that part of the prospectus for which they are responsible is in accordance with the facts and contains no admissions likely to affect the import of the prospect us'. There are additional rules relating changes in the auditors in the previous three years, details of options, tax clearances, and the terms of the directors' service contracts are also required to be disclosed.

Information contained in the prospectus should not be misleading, false or deceptive, the companies will incur both civil and criminal liability under the Financial Services and Markets Act 2000 is evidence supporting materials errors on the prospectus established.

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