BPP University College Of Professional Studies Limited (BPP)
Equity Finance Exam Bundle (Revision Notes).
High distinction achieved in Equity Finance and in LPC course overall.
Useful for open note exams to quickly consult topic area as well as to memorise for closed note.
Exam Structures usefully highlighted.
BPP University College Of Professional Studies Limited (BPP)
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Equity Finance (EQUITY)
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EQUITY FINANCE EXAM BUNDLE
Table of Contents
SGS 1 – Flotation: Preparations for Listing 3
Advantages + Disadvantages of a flotation 4
Preparations for Listing on the Main Market 7
SGS 2 – Flotations 2: Offer + Listing Applications Process 19
Retail vs Institutional Offers 21
Pre marketing steps 22
Format and Content Requirements of a Prospectus…………………………………………………………..26
Key Stages in Offer and Listing Application Process………………………………………………………..30
SGS 3 – Alternatives to a Premium Listing ……………………………………………………………………………………..34
Key Differences Between AIM and Standard/Premium Listing……………………………………………………..36
Advantages/Disadvantages of AIM vs Main Market………………………………………………………………..38
Advisers on an Admission to AIM………………………………………………………………………………………….41
Admission Requirements for AIM……………………………………………………………………………………….43
Potential Liability For Matters Arising After Publication of Prospectus + Before Or After
Commencement Of Trading………………………………………………………………………………………………………….70
De-listing and Going Private……………………………………………………………………………………….188
2
,SGS 1 – FLOTATION – PREPRATIONS FOR LISTING
identify the key legislation and regulations affecting equity securities in the UK;
advise your client and its board on the advantages and disadvantages of seeking a
flotation;
undertake part of a legal due diligence exercise to ensure that your client is an appropriate
applicant for listing on the Official List under the Listing Rules; and
analyse the management of an applicant company with reference to the UK Corporate
Governance Code.
SGS 1 =
BLUE BOX:
- DUE DILIGENCE
- PREPARATION OF APPLICANT
FTSE 100 – Largest companies by size (share index), most capitalised UK companies.
3
, LSE: Made up of MAIN MARKET and AIM.
Primary issue/FLOTATION = the first time that a company lists and trades the shares on a public
market.
Flotation/IPO (mean the same thing)
Official list: listed on the main market of the LSE (not AIM)
Full listing: refers to a company being listed on the Official List
RIE: Recognised Investment Exchange
ADVANTAGES AND DISADVANTAGES OF SEEKING A FLOTATION
ADVANTAGES DISADVANTAGES
Mechanism to raise significant amount of Burden of disclosure and reporting
finance requirements – companies listed on the Official
List must comply with large number of
regulatory requirements.
Providing a market – shareholders can take Management time – complex and time
advantage of ready made public markets consuming and will involve significant
investment of management time.
Improve gearing ratio of a company if it is highly Changes to the board – need to ensure directors
indebted. have appropriate expertise and need to comply
with Corporate Governance Code. Stipulates
how board should be made up.
Improves liquidity – have a share price/market Costs and fees: Expense is significant. Advisers
full of shares and have a ranking. Liquid = wider all need to be paid and a lot of cash raised will
pool of investors. need to be used to meet these costs.
Costs are typically 10% of the deal value.
Public profile and marketing – usually good for Accountability and control – board control will
business and the fact it is listed means progress disappear and at shareholder level.
can be closely monitored by investors. Board will be a mixture of execs and non-execs.
Shareholders unlikely to have any stake bigger
Knowledge that company is in compliance with than a few %
the LDPTs and Code makes it more attractive to Institutional investors could block decisions
investors.
Enables shareholders wanting to exit to sell their The raised profile is bad press if something goes
stakes and realise their investment. wrong.
Employee share schemes – tax efficient way of Competitors can buy your shares – hostile
keeping employees incentivised and paying takeovers and makes the company vulnerable.
them.
ADVISERS ON A LISTING TO THE MAIN MARKET
4
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