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Public Companies

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3 months ago

September 16, 2024

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Practice MCQs – 30 questions randomly selcted.

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Public Companies 30 Questions

1 / 30

Assume that George told Lucas about the slump in Innov8's profits.
Lucas will not infringe Article 14 (a) UK MAR, as he could not be classified as an "insider".

True or False?

True

False

Insiders are defined in UK MAR, Article 8 (4).
There is no suggestion on the facts that Lucas is a director of Innov8 or otherwise
involved with the company, or that he is engaged in criminal activity.
He could, however, reasonably be expected to know that information about the slump
in profits was "inside information" - after all, his friend is the company's finance
director (final paragraph of Article 8 (4)).
See also Recital (26) UK MAR: "In this respect, the competent authorities should
consider what a normal and reasonable person knows or should have known in the
circumstances"

2 / 30

Following on from Question 3, assume that George suggested to his friend, Lucas, that Lucas should
sell his 200 shares in Innov8. Lucas's shareholding represents a 0.001% stake in the company.

If the FCA was alerted to George's actions and was minded to take action against him, which two of
the following combinations of UK MAR provisions would be most likely to form the basis for a market
abuse claim?

Article 10 and 14 (c)

Articles 12 and 15

Articles 8 and 14 (a)

Articles 8 and 14 (b).

Here George has not dealt in the shares himself but is probably guilty of recommending
or inducing his friend Lucas to engage in insider dealing (Article 14 (b)) as well as
unlawful disclosure of inside information (Article 14 (c)) - assuming in either case that
the information meets the criteria of "inside information". However, it is perhaps
questionable whether the regulator, the FCA, would pick up on George's behaviour,
unless it was 'tipped off'.

3 / 30

Fresno plc has shares which have been admitted to trading on the Main Market of the
London Stock Exchange.

Indicate whether the following statement is true or false:

A sale and purchase of Fresno shares between two individuals which does not take place on the
London Stock Exchange (i.e. it is "off market"), may nevertheless amount to market abuse.

True

False

The UK Market Abuse Regulation applies to "financial instruments" admitted to
trading on one of the trading venues prescribed by UK MAR irrespective of
whether the dealing takes place on or 'off market'. This is expressly provided
by Article 2 (3) of UK MAR.
In practice, of course, market abuse is most likely to be discovered if the
dealing takes place on one of the trading venues prescribed by UK MAR.

4 / 30

Parmiter plc, a UK premium-listed company, is proposing to enter into a transaction to acquire a
business from Ascot Limited. John Davis, a director of Parmiter, is also a shareholder of Ascot.

The transaction may be a related party transaction for Parmiter if John owns at least 30% of the voting
shares in Ascot.

True or false?

True

False

Refer to Listing Rule 11.1.4R (5) and the definition of "associate" in
Listing Rules Appendix 1.1

5 / 30

Brakes Plc is a UK premium listed company with shares traded on the Main Market of the
London Stock Exchange. It is proposing to acquire the whole of the issued share capital of
Firesafe Limited. Firesafe is wholly owned by Graham Dawes. Graham Dawes is not a
director of Brakes but he owns 12.5% of its voting share capital.

Which one of the following accurately describes how the proposed acquisition of Firesafe would be
classified under the Listing Rules?

A Class 1 transaction.

A reverse takeover.

A related party transaction.

A Class 2 transaction.

A "related party transaction" means a transaction between a listed company and a
related party (LR 11.1.5R).
A "related party" includes a "substantial shareholder" and an "associate" of a
substantial shareholder.
A "substantial shareholder" is defined as one able to control 10% or more of the voting
rights. Graham owns 12.5% of the voting shares of Brakes. He is therefore
a "substantial shareholder".
An "associate" is defined for this purpose as including a body corporate of which a
director owns 30% or more of the equity share capital (see LR Appendix 1.1). Graham
owns the whole of the issued share capital of Firestone and it is therefore an associate
of his, although in this case the related party transaction is between the listed company
(Brakes) and the related party (Graham).

6 / 30

In relation to the rules for the classification of transactions under Rule 5.6 and Chapters 10 and 11 of
the Listing Rules, the four calculations referred to as the "class tests" set out in Listing Rule 10, Annex
1, are the only calculations permitted by the Financial Conduct Authority.

True or false?

True

False

LR 10 Annex 10G allows the Financial Conduct Authority to substitute other tests
where appropriate.

7 / 30

Following on from Question 1, which of the following are consequences of the transaction for
Soltronics?

Soltronics must send an announcement to a Regulatory Information Service.

Soltronics must send a Notice of General Meeting to its shareholders to obtain their approval of the transaction.

Soltronics must send an explanatory circular to its shareholders.

Soltronics need not observe any formalities, other than to approve the transaction at board level.

Listing Rule 10.5.1R sets out the relevant requirements.

8 / 30

Atrax plc (Atrax) has recently obtained an AIM quotation and has asked you to advise as to whether its directors or persons closely associated with them have an obligation to disclose dealings by them in the shares of Atrax. Which one of the following statements BEST answers Atrax's query?

AIM Rule 17 imposes an obligation on Atrax to notify an RIS of deals by directors of which it is aware.

Under Article 19 of the UK Market Abuse Regulation ("MAR") persons discharging managerial responsibility (PDMRs) within Atrax and persons closely associated with them must disclose all deals in Atrax shares.

The disclosure obligations under MAR, Article 19 do not apply to Atrax because it is an AIM quoted company.

Under MAR, Article 19 PDMRs within Atrax and persons closely associated with them must disclose all dealings in Atrax shares once they exceed EUR 5000 in a calendar year.

D is the best statement of advice. AIM Rule 17 (option A) requires disclosure of relevant changes in the holdings of significant shareholders. Article 19 UK MAR (and UK MAR generally) applies to multilateral trading facilities (or "MTFs") which includes AIM quoted companies. The obligation under UK MAR, Article 19 (1) only applies once transactions totalling more than EUR 5000 in value have been reached in a calendar year (Art. 19 (8)).

That is correct. D is the best statement of advice. AIM Rule 17 (option A) requires disclosure of relevant changes in the holdings of significant shareholders. Article 19 UK MAR (and UK MAR generally) applies to multilateral trading facilities (or "MTFs") which includes AIM quoted companies. The obligation under UK MAR, Article 19 (1) only applies once transactions totalling more than EUR 5000 in value have been reached in a calendar year (Art. 19 (8)).

9 / 30

The obligation on PDMRs and persons closely associated with them to notify the company and the competent authority of dealings under Article 19 (1) UK MAR must be made promptly and no later than three working days after the transaction. Provided the notification is made within the prescribed time limits, it does not matter what form the notification takes. Is this statement true or false?

True

False

The answer is false. The notification has to be made in the form prescribed by FCA Technical Standard: Commission Implementing Regulation (EU) 2016/523 made pursuant to Article 19 (15) UK MAR. You can find copies of these forms on the FCA website

10 / 30

Martin is a director of KLS PlC, a company with shares admitted to the Official List and to trading on the Main Market of the London Stock Exchange. Which one of the following would NOT be a "person closely associated" with Martin for the purposes of the UK Market Abuse Regulation?

Martin's civil partner, Andrew.

Underwoods Ltd, a private company wholly owned by Martin.

Martin's uncle Phillip who has never shared the same household as Martin.

Martin's 6 year old daughter Francesca by a previous marriage.

the term "person closely associated" is defined in Article 3 (1) (26) UK MAR. This refers to a spouse or a partner considered to be equivalent to a spouse in accordance with national law; Civil partners (option A) are included by virtue of s131AC (1) Financial Services and Markets Act 2000; similarly, the meaning of "dependent child" (option D) in Article 3 (1) (26) (b) UK MAR is to be determined in accordance with national law and under s131AC (2) FSMA 2000. This means a child under the age of 18 who is unmarried and does not have a civil partner. Option B would be a person closely associated with Martin by virtue of it being a company controlled by Martin (Article 3 (1) (26) (d) UK MAR).

That's right - well done. The term "person closely associated" is defined in Article 3 (1) (26) UK MAR. This refers to a spouse or a partner considered to be equivalent to a spouse in accordance with national law; Civil partners (option A) are included by virtue of s131AC (1) Financial Services and Markets Act 2000; similarly, the meaning of "dependent child" (option D) in Article 3 (1) (26) (b) UK MAR is to be determined in accordance with national law and under s131AC (2) FSMA 2000. This means a child under the age of 18 who is unmarried and does not have a civil partner. Option B would be a person closely associated with Martin by virtue of it being a company controlled by Martin (Article 3 (1) (26) (d) UK MAR).

11 / 30

Which one or more of the following are recommendations contained in the UK Corporate Governance Code?

The roles of Chairman and Chief Executive should not be exercised by the same person.

The amount of the remuneration and other benefits of directors should be clearly set out in the company's annual accounts.

The board should establish the following committees:  remuneration committee  audit committee and  nominations committee (to recommend appointments etc. to the board).

Persons discharging managerial responsibilities ("PDMRs"), including directors, should not deal in their company's shares during a closed period.

One of the independent non-executive directors should be nominated as the senior nonexecutive director and be available to assist where shareholders have concerns which cannot be resolved through the normal channels of Chairman, Chief Executive or Finance Director.

Well done, all your answers are correct. You have correctly spotted the relevant provisions in the UK Corporate Governance Code, namely: A Chairman and Chief Executive: Section 2 (Division of Responsibilities), Provision 9. C Board Committees: Remuneration: Section 5 (Remuneration), Provision 32; Audit: Section 4 (Audit, Risk and Internal Control, Provision 24; Nominations: Section 3 (Comp osition, Succession and Evaluation), Provision 17. E Appointment of senior independent director: Section 2 (Division of Responsibilities), Provision 12. For quoted companies the requirement to publish directors' remuneration (B) derives principally from s420 CA 2006; the restrictions on PDMR's dealing in their own company's shares (D) are derived principally from Article 19 of the UK Market Abuse Regulation although companies may also have their own code of dealing.

12 / 30

Indicate 'yes' if you agree or 'no' if you disagree with the following statement. A prospectus approved by the Financial Conduct Authority for the purpose of making an offer of transferable securities to the public in the UK can generally be used to make a public offering of shares in any other jurisdiction including the United States.

Yes

That's right. The mutual recognition or "passporting" provisions of the EU version of the Prospectus Regulation only apply among Member States of the European Union (see Art. 24 and 25 EU Prospectus Regulation). Since the UK left the EU on December 2020 these provisions no longer apply to UK prospectuses approved by the FCA (see the UK version of the Prospectus Regulation). Cross border capital raising outside the UK usually involves separate registration and filing requirements unless there are exemptions available . In the US for example, a registration document may need to be approved by and filed with the Securities and Exchange Commission

13 / 30

Supernova plc's shares are quoted on AIM. Which of the following rules will apply to Supernova while it is on AIM?

Nomad Rules

Prospectus Regulation Rules

Listing Rules

DTR 5

AIM Rules

That is correct. The correct answer is B, D and E. A, Nomad Rules, only apply to the Nomad and not the quoted company. C, Listing Rules, only apply to companies admitted to the Official List. B, PRRs, will only apply if Supernova is required to publish a prospectus.

14 / 30

Which two or more of the following are exempt under the Prospectus Regulation from the general requirement to publish a prospectus in connection with offers of securities to the public in the UK?

Offers to qualified investors only.

Offers made to fewer than 150 persons in the UK, other than qualified investors.

Offers of securities made in connection with a takeover provided a document containing information describing the transaction and its impact on the issuer is made available to the public.

Shares allotted to existing or former directors or employees provided a document is made available containing information on the number and nature of the securities and the reasons for and details of the offer or allotment.

That's right. They are all exempt under provisions of the Prospectus Regulation. The relevant authorities are:

A - Art. 1 (4) (a) Prospectus Regulation. See Art. 2 (e) Prospectus Regulation for the meaning of 'qualified investors'.

B - Art. 1 (4) (b) Prospectus Regulation.

C - Art. 1 (4) (f). The minimum information required to be included in such a document is prescribed by Level 2 regulations made under Art. 1 (7).

D - Art. 1 (4) (i) Prospectus Regulation.

15 / 30

Companies seeking a quotation of their shares on AIM must have at least 25% of their shares in public hands after the IPO and have at least a 3 year trading record. True or false?

True

False

That is correct. There is no minimum percentage requirement for shares in public hands or minimum trading period required in order for a company to join AIM.

16 / 30

Reichstampf AG (“Reichstampf”) is a German company with shares traded on the
Frankfurt Stock Exchange. It is seeking to raise new capital through a secondary
issuance of shares. The shares will be offered to the public in both Germany and the
UK. Reichstampf has published a prospectus in connection with the offering of its
shares in Germany. The prospectus, drawn up in the German language, has been
approved by BaFin, the competent authority in Germany.
Which ONE of the following statements regarding Reichstampf’s offering of its shares
to the public in the UK is INCORRECT:

Reichstampf can ‘passport’ its German prospectus into the UK.

Reichstampf must publish a separate prospectus in the UK complying with the Prospectus Regulation Rules and approved by the Financial Conduct Authority (“FCA”).

If Reichstampf wishes to ‘passport’ its prospectus into the UK the FCA must require that the summary of the prospectus is made available in English.

If Reichstampf wishes to ‘passport’ its prospectus into the UK it must request BaFin to supply the FCA with a certificate of approval stating that the prospectus has been drawn up in accordance with the requirements of the Prospectus Regulation and with an electronic copy of the prospectus.

See Article 7 (11) UK Prospectus Regulation.
Wrong answers: A – not more than 7 sides; C – requirement of the
Registration Document and Securities Note (Item 1.1, Annex 1 and Item
1.1. Annex 11 PR Regulation); D – risk warnings are also required under
each of the headings referred to Article 7 (4) (b) (c) and (d).

17 / 30

Your firm acts for the sponsor to Steadfast plc (“Steadfast”) in connection with a
proposed rights issue whereby Steadfast is seeking to raise £560 million through the
issue of new ordinary shares (“Rights Issue”). Steadfast’s existing shares are
admitted to the premium segment of the Official List and traded on the Main Market
of the London Stock Exchange. Steadfast and its advisers have prepared a first draft
of a prospectus to be issued in connection with the Rights Issue.
The sponsor seeks your advice on the procedure to be followed for approval of the
draft prospectus. Which ONE of the following is the CORRECT advice?

The first draft of the prospectus should be submitted to the Financial Conduct Authority (“FCA”) for approval annotated in the margin to show compliance with Prospectus Regulation Rules.

Unless the order of the disclosure items in the draft prospectus coincides with that set out in the Annexes to Commission Delegated Regulation (EU) 2019/980 (the “PR Regulation”) a cross reference list must be submitted to the FCA showing the pages where the disclosure items of the PR Regulation can be found, together with the first draft of the prospectus.

The first draft of the prospectus should be submitted to European Securities and Markets Authority for approval together with a statement signed by the sponsor that it complies with the requirements of the PR Regulation.

The first draft of the prospectus should be submitted to the FCA for approval together with a statement signed by the directors of Steadfast that it complies with the requirements of the PR Regulation and accepting responsibility for its contents.

See Article 24 (5) PR Regulation and PRR 3.1.3 R.
Wrong answers: A – see correct answer; C – approval of the prospectus is
by the Financial Conduct Authority; D – see correct answer.

18 / 30

Hedley PLC (“Hedley”) is a premium listed company with shares admitted to trading
on the Main Market of the London Stock Exchange (“LSE”). Hedley has 200 million
ordinary shares of 10p each in issue.
In order to finance an acquisition, it is proposing to raise £30 million through a placing
of 7,500,000 new ordinary shares at an issue price of £4.00 per share. The new
ordinary shares will be admitted to the Official List and to trading on the Main Market
of the LSE.
The shares will be placed with three individuals and a maximum of 40 financial
institutions, all of which are “qualified investors” resident in various Member States of
the European Union. Hedley has not issued any new shares for the past two years.
On the basis of the above facts which ONE of the following statements is
CORRECT?

Hedley does not need to issue a prospectus.

Hedley must issue a prospectus because the new ordinary shares are to be admitted to trading on the Main Market of the LSE.

Hedley does not need to issue a prospectus because a placing is not an offer of securities to the public.

Hedley needs to issue a prospectus because the offer is not made to “qualified investors” only

Both the offer to the public and the application for admission to trading are
exempt from the obligation to publish a prospectus. Offer to the public (Art
3 (1) UK Prospectus Regulation) exempt under Art. 1 (4) (a) (“Qualified
investors only”) and Art. 1 (4) (b) (fewer than 150 persons in the UK, other
than qualified investors). Admission to trading (Art 3 (3) exempt under Art.
1 (5) (a) UK Prospectus Regulation (securities amount to less than 20% of
securities already admitted to trading over the last 12 months)
Wrong answers: B – exempt from admission to trading - see above.; C –
an “offer of securities to the public” as defined in Art. 2 (d) UK Prospectus
Regulation may include a placing but that is not the reason for the
exemptions – see above; D – the offer to the public is exempt on the basis
of Art. 1 (4) (a) and 1 (4) (b) – see above. Exemptions may be combined
(Art. 1 (6) UK Prospectus Regulation).

19 / 30

Python plc (“Python”) is considering whether to apply for its ordinary shares to be
admitted to the Official List. It currently has no shares admitted to listing.

If Python applies for a premium listing of its shares which ONE of the following
eligibility criteria of the Listing Rules must it comply with that it would NOT have to
comply with if it applied for a standard listing?

Its ordinary shares must be admitted to trading on the Main Market of the London Stock Exchange.

The expected market capitalisation of the shares on listing must be at least £700,000.

There must not be any ordinary shares in issue that are not listed.

It must be able to demonstrate that it will be carrying on an independent business as its main activity.

D is a Chapter 6 LR requirement (LR 6.4.1R) applicable only to
companies seeking a premium listing of equity shares.
Wrong answers: A, B and C are all Chapter 2 LR requirements applicable
to all applicants (LR 2.2.3R, 2.2.7R and 2.2.9R).

20 / 30

Lynx plc has a standard listing and its shares are traded on the Main Market of the London Stock
Exchange. It is about to launch a rights issue. It will be making a Gazette Route offer and does not
propose to disapply pre-emption rights.

For how long must its offer remain open to acceptance?

10 business days

10 clear days

14 days

14 clear days

The rule in LR 9.5.6R only applies to premiumlisted companies. Standard listed companies are subject to the time limits in the
Companies Act 2006 ("CA 2006"). Given that the offer will be made on a pre-emptive
basis s562(5) CA 2006 applies and the offer must remain open for at least 14 days.
Note that s360 CA 2006 does not apply to this provision and so it is simply 14 days and
not 14 clear days.

21 / 30

Indigo plc is making preparations for a rights issue. The discount to the market price of 380p will be
35%. The company intends to raise £988,000,000 from the issue of shares. How many shares issued
at the discounted issue price will it need to issue to raise this sum?

350,000,000 new shares

375,000,000 new shares

400,000,000 new shares

4200,000,000 new shares

That's right - the correct answer is C.
Market price 380p x 35% = 133p discount
380p less discount of 133p = issue price of 247p
Funds required £988,000,000 = 400,000,000 new shares required
£2.47 issue price

22 / 30

Obtaining authority to allot at an AGM can be advantageous for a number of reasons including
flexibility, certainty and savings of time and cost - since the need for a general meeting prior to the
issue of shares can be avoided. However, it may not be possible to simply use the authority to allot
granted at the AGM without the need for a further general meeting. The company may be forced to call
a general meeting in order to progress the secondary issue.
Inversion plc ("Inversion") is a premium listed company with shares traded on the the Main Market of
the London Stock Exchange. It is planning a rights issue and has passed resolutions at its last AGM in
accordance with the maximum amounts permitted by the Investment Association Guidelines but has
not disapplied pre-emption rights. Which one of the four reason stated below is NOT a reason why
Inversion would still need to call a general meeting in order to progress the proposed secondary issue.

The proposed issue exceeds the maximum number of shares authorised for allotment by the authority obtained at the AGM.

The rights issue will be made via the Gazette Route.

The rights issue will fund a takeover which will be a class one transaction.

The rights issue will fund a related party transaction.

A, C and D will all necessitate a general meeting in order that
shareholder approval can be obtained for: A - new authority to allot; C - the class one
transaction; D - the related party transaction. B - making the offer via the Gazette
Route - would avoid the need for a general meeting to disapply pre-emption rights in
relation to overseas shareholders and enable it to round down fractional entitlements to
the nearest whole number.

23 / 30

Utopia plc is a premium listed company. It wishes to raise £765m by way of a rights issue. The market
value of the company's shares traded on the Main Market of the London Stock Exchange is160p per
share. The company is to offer the shares at a discount to the market price of 40%.

Therefore, in order to raise the desired sum by issuing shares at the stated discount to the market
price, the company will have to issue 895,875,000 new shares.

True or false?

True

False

The shares will be issued at a 40% discount to the market price: 160p
x 40% = 64p discount
160p less 64p discount = 96p issue price
To Raise £765m £765,000,000 = 796,875,000 new shares needed
£0.96 issue price

24 / 30

A listed company undertaking a rights issue or an open offer will need to deal with the problems
caused by fractional entitlements and excluded overseas shareholders. In this connection, which one
of the following statements is WRONG?

The company has the option to decide not to allot the fractions (essentially ignoring them) and to round down each shareholder's entitlement to the nearest whole number. This is accepted as complying with the requirements of s561 (1) (a) Companies Act 2006.

If the company decides to use the Gazette Route offer to deal with excluded overseas shareholders then it will, as part of the standard Gazette Route process, not allot the fractional entitlements (essentially ignoring them).

If the company choses the Gazette Route/does not allot the fractions then there will be no need to disapply pre-emption rights to deal with either fractional entitlements or excluded overseas shareholders.

If the company decides to aggregate the fractional entitlements and then sell them for the company's benefit, this will also be regarded as compliance with the pre-emption requirements of s561 (1) (a) CA 2006.

A, B and C are correct. It should be clear that
opting for the Gazette Route/ignoring the fractions and rounding down entitlements
saves time since there is no need for a general meeting to deal with fractions or
excluded overseas shareholders. However, the company may decide to aggregate the
fractions and sell them in the market place as Nil Paid Rights for the company’s
benefit, thus raising more money for the company. This option is not pre-emptive, so
pre-emption rights will need to be disapplied at a general meeting, which will make the
process longer.

25 / 30

ARG Foods plc (ARG) is proposing a rights issue to raise funds to develop its research and
development facilities.
Assume that:

1. ARG's articles of association include provision that all shareholder meetings are to be called on
clear days' notice and that all notices are deemed received by shareholders 48 hours after either
posting or electronic transmission.

2. ARG needs shareholder approval of its rights issue to disapply statutory pre-emption rights.
Notice of a GM (not an AGM) is sent out on 8 August. Which of the following is the earliest date on
which the requisite GM could be held?
(You should answer by reference to the relevant Companies Act 2006 provision for the length of notice
of shareholder meetings on the basis that all required conditions in that provision are satisfied.)

23 August

25 August

30 August

1 September

The right answer is B. Assuming that all conditions have been met, section
307A(1)(a) of the Companies Act 2006 provides that the notice period for shareholders
of a listed company to vote on special resolutions at a General Meeting (not an AGM)
is at least 14 days. Note also that section 360 of the Companies Act 2006 requires that
the GM notice period is in clear days.

26 / 30

If a company needs to pass shareholder resolutions at a General Meeting in order to proceed with a
rights issue, the posting of provisional allotment letters to shareholders and crediting of CREST
shareholder accounts with entitlements to nil paid rights takes place on which of the following dates?

When the rights issue is first announced.

At the same time the prospectus and notice of General Meeting is sent to shareholders.

Immediately following the General Meeting at which the resolutions are passed.

Two days after admission of the nil paid rights to listing and trading.

Subject to the resolutions being duly passed at the General Meeting , the PALs will
be posted to shareholders immediately afterwards.
Admission and commencement of dealings in the nil paid rights will take place the
following day.
If no General Meeting is required then the whole process will be shortened by the
length of time required to convene the meeting, and PALs can be posted at the same
time the prospectus is sent out.

27 / 30

Under the Listing Rules which of the following is the minimum period that an offer of ordinary shares
made by way of rights by a company with shares admitted to the premium segment of the Official List
and traded on the London Stock Exchange's Main Market must remain open for acceptance?

10 business days.

14 days.

21 clear days.

10 clear days.

The answer is 10 business days (LR 9.5.6R). Note the definition of
"business days" in the Glossary.
Note that the statutory period under s562 (5) CA 2006 is 14 days. This is therefore
usually the same as the Listing Rules requirement.

28 / 30

Which of the following are characteristic features of a Provisional Allotment Letter or PAL?

The PAL can be traded "nil paid" through the market.

The allottee can accept in respect of part only of the rights comprised in the PAL.

A shareholder wishing to take up the rights comprised in the PAL will automatically become registered as the holder of the shares even if he does nothing.

A shareholder who does not wish to take up the rights can renounce his entitlement in whole or in part by signing the form of renunciation included in the PAL.

They are all characteristic features of the PAL
except C.

29 / 30

Under the Investment Association ("IA") Share Capital Management Guidelines which one of the
following is the maximum amount of new shares that directors may be given a general authority to allot
under s551 CA 2006?

One third of the listed company's issued share capital.

Half of the listed company's nominal share capital.

One third of the listed company's issued share capital plus a further one third to be issued in connection with a rights issue.

Three quarters of the listed company's issued share capital.

The IA guidelines were amended following the report of the Rights Issue Review Group
in the wake of the 2008 financial crash when companies had to raise large amounts of
new capital to repair their balance sheets, so as to permit companies to issue a further
one third of their issued share capital (previously restricted to one third) in connection
with a rights issue made on a fully pre-emptive basis.

30 / 30

Nova plc is a company whose shares are traded on AIM. It has an issued share capital of £100 million
divided into 500 million ordinary shares of 20p each. It is proposing to raise £75 million to finance the
acquisition of a business through a new issue of ordinary shares for cash. The shares will be placed
with a few institutional investors at 37.5p per share.

The directors have been generally authorised for the purposes of s549 Companies Act 2006 to allot
shares up to a nominal amount of £33 million. There are no current powers for the directors to disapply
statutory pre-emption rights under s561 CA 2006.

Which two of the following may be appropriate to avoid Nova's obligation to offer the new shares first
to its existing shareholders?

Special resolution under s570 disapplying the statutory pre-emption rights under s561

A waiver by all the existing shareholders of their rights under s561 CA 2006.

Ordinary resolution to alter the articles of association of Nova to permit the allotment of shares disregarding the provisions of s561CA 2006.

Ordinary resolution under s551 CA 2006 authorising the directors to allot shares.

Where directors are generally authorised to allot shares the pre-emption rights may be
disapplied by special resolution under s570 CA 2006 (Option A).
In order to raise £75 million at 37.5p per share the company would need to issue 200
million new ordinary shares. It only has authority to allot up to 165 million shares of 20p
each. It will therefore need to increase that authority by ordinary resolution to cover the
requisite number of shares (Option D).
Although s570 CA 2006 does permit directors to disapply pre-emption rights where
they have been generally authorised to allot shares through a provision under the
articles (Option C), this would require a special resolution to alter the articles; in
practice this approach is seldom taken by public companies because of institutional
pressure to renew such powers annually at the AGM (see the Investment Association
Guidelines on Share Capital Management).
It is impractical to seek a waiver of s561 from all the shareholders of a quoted
company (Option B).

Your score is

The average score is 9%

All 90 Public Companies MCQs Including from the Mock Assessment

0 votes, 0 avg

Public Companies MCQs

1 / 90

Dashcorp Plc is a mining company with shares admitted to the Premium Segment of the Official List and traded on the Main Market of the London Stock Exchange. Under the Listing Rules it must have in place effective systems and controls for enabling PDMRs to obtain clearance to deal in its securities. True or false?

True

False

The statement is false. The FCA considered instating such a rule but decided against doing so on the basis it might create a two tier system with the requirements under MAR Article 19. Contrast the position under the AIM Rules (see previous question). There is of course nothing to prevent a listed company from putting in place its own dealing code, subject to compatiblity with MAR. In practice that is what they do.

2 / 90

Yes

3 / 90

When the rights issue is first announced.

At the same time the prospectus and notice of General Meeting is sent to shareholders.

Immediately following the General Meeting at which the resolutions are passed.

Two days after admission of the nil paid rights to listing and trading.

4 / 90

Tredwell plc (“Tredwell”) is holding discussions with Ritefit plc (“Ritefit”) regarding a
possible takeover of Ritefit. Both companies’ ordinary shares are admitted to the
premium segment of the Official List and traded on the Main Market of the London
Stock Exchange. The takeover discussions have not yet been made public but news
of them is likely to send the share price of Ritefit substantially higher. Negotiations
regarding the terms of the transaction are at a delicate stage and neither company
wishes to make an announcement at this point.
Which ONE of the following statements BEST SUMMARISES of the disclosure
obligations arising from the takeover discussions, disregarding for this purpose any
obligations that may arise under the Takeover Code?

Neither company is obliged to make any announcement as to do so might prejudice the outcome of their discussions.

The information about the takeover discussions is “inside information” which Tredwell as the potential bidder must make public as soon as possible.

The information about the takeover discussions is not “inside information” so there is no need for either party to make any public disclosure.

Both companies can delay making the discussions public on the basis that immediate disclosure would be likely to prejudice their legitimate interests provided they can ensure confidentiality and the public are not likely to be misled.

Both companies are within the scope of UK MAR, Article 17. The
takeover discussions are clearly “inside information” (they satisfy the
criteria in Article 7 UK Market Abuse Regulation). Delaying the public
disclosure of inside information is possible provided all the conditions in
Article 17 (4) are met (Option D).
Wrong answers: A, B and C – see correct answer.

5 / 90

AIM Rule 17 imposes an obligation on Atrax to notify an RIS of deals by directors of which it is aware.

The disclosure obligations under MAR, Article 19 do not apply to Atrax because it is an AIM quoted company.

Under MAR, Article 19 PDMRs within Atrax and persons closely associated with them must disclose all dealings in Atrax shares once they exceed EUR 5000 in a calendar year.

6 / 90

To which one or more of the following rules must a company quoted on AIM adhere?

AIM Rule 11

Article 17 of the UK Market Abuse Regulation

UK Corporate Governance Code

DTR 7

That is correct. Both AIM Rule 11 and Article 17 UK MAR apply to an AIM company. Note that although there is some common ground between the two, compliance by an AIM company with Rule 11 will not necessarily mean that it has met its obligations under Article 17 UK MAR and vice versa. The remainder apply only to listed companies

7 / 90

Indicate whether the following statement is true or false: The subject matter in each row of the left hand column below is correctly identified as being derived from the primary source material in the opposite row of the right hand column. True or false?
A. Grants power to the Financial Conduct Authority to make 'Part 6 Rules'. The Financial Services and Markets Act 2000.

B. Contains detailed contents requirements for prospectuses. PR Regulation and Prospectus Regulation Rules.

C. Defines the circumstances in which a prospectus must be published. UK Prospectus Regulation and the Financial Services and Markets Act 2000.

D. Contains the detailed eligibility criteria for admission of securities to listing. The Listing Rules.

E. Contains exemptions from the requirement to produce a prospectus. UK Prospectus Regulation

F. Contains the admissions procedure for admission of securities to trading on the London Stock Exchange's Main Market. The Admission and Disclosure Standards.

True

False

See in particular:
A (Section 73A FSMA 2000).
B (PR Regulation and Prospectus Regulation Rules (PRR App 2)).
C (Article 3, UK Prospectus Regulation and s85 FSMA 2000).
D (Chapters 2 and 6 Listing Rules).
E (Article 1, UK Prospectus Regulation).
F (Admissions and Disclosure Standards, particularly Section 2 and 3).

8 / 90

Under the rules applicable to dealings by PDMRs in shares or debt securities of their own companies a "closed period" means a period during which the PDMR concerned is in possession of unpublished price sensitive information. Is this statement true or false?

True

False

That's right. The statement is false. The relevant rule is Article 19 (11) of the UK Market Abuse Regulation. This prohibits dealings by PDMRs in their company's shares or debt instruments during a "closed period" which refers to the period of 30 days prior to the announcement of an interim or year end financial report. The PDMR may of course be in possession of "inside information" and therefore liable to commit the civil offence of insider dealing if he/she buys or sells shares during such period.

9 / 90

True or false?

True

False

LR 10 Annex 10G allows the Financial Conduct Authority to substitute other tests
where appropriate.

10 / 90

Which of the following are characteristic features of a Provisional Allotment Letter or PAL?

The PAL can be traded "nil paid" through the market.

The allottee can accept in respect of part only of the rights comprised in the PAL.

A shareholder wishing to take up the rights comprised in the PAL will automatically become registered as the holder of the shares even if he does nothing.

A shareholder who does not wish to take up the rights can renounce his entitlement in whole or in part by signing the form of renunciation included in the PAL.

They are all characteristic features of the PAL
except C.

11 / 90

Soltronics plc is a UK premium-listed company. It has an issued share capital of 4,000,000 ordinary
shares of 25p each which are currently trading at £2.10 per share. The latest annual accounts show
profits of £2,200,000 with net assets of nearly £5,500,000. Soltronics is contemplating a takeover of
Timon plc, another UK listed company. The acquisition price will be in the region of £2,000,000. Timon
plc's latest annual accounts show profits of £900,000.

Based on the above information, how would this transaction be classified under the Listing Rules from
Soltronics' point of view ?

Reverse takeover.

Related party transaction.

Class 2.

Class 1.

Applying the class tests, if any of the percentage ratios are 25% or more, the
transaction will be classified as a Class 1 transaction (LR10.2.2R (3)).
Applying the profits test produces a percentage ratio of 40.9%. The consideration
test produces a ratio of 23.8%.
Note that when applying the class tests it is the size of the transaction relative to that
of the listed company (not the other way round) that is used to measure the ratio.
There is no evidence that the transaction involves a "related party" (option B) for
either company.

12 / 90

Indicate whether the following statement is true or false. Under the Prospectus Regulation Rules ("PRRs") if the order of disclosure of items in the prospectus submitted for approval to the Financial Conduct Authority ("FCA") does not coincide with the order set out in the Annexes to the PR Regulation a cross reference list must be provided to the FCA showing where such items can be found.

True

False

Well done. This is provided by Art. 24 (5) of the PR Regulation and PRR 3.1.3R to make it easier for the FCA to check compliance with the rules. In practice this is a task usually given to trainees.

13 / 90

The Pre-emption Group Statement of Principles applies to issues for cash made otherwise than on a
pre-emtive basis. The Statement of Principles advise that a general disapplication of pre-emption rights
will only ever be supported if it is for 5% or less of the company's issued share capital in any one year.
True or false?

True

False

The Statement of Principles permits an additional 5%
disapplication for an acquisition or specified capital investment. See Part 2A, paras
1-4 for further detail.

14 / 90

Which one or more of the following are recommendations contained in the UK Corporate Governance Code?

The roles of Chairman and Chief Executive should not be exercised by the same person.

The amount of the remuneration and other benefits of directors should be clearly set out in the company's annual accounts.

The board should establish the following committees:  remuneration committee  audit committee and  nominations committee (to recommend appointments etc. to the board).

Persons discharging managerial responsibilities ("PDMRs"), including directors, should not deal in their company's shares during a closed period.

15 / 90

For those shareholders who can participate in a rights issue on the Main Market of the LSE, there are
four options for how the shareholder could respond to the offer. The four options are listed below but
one of them is incorrectly stated. Which option is incorrectly stated?

The shareholder can renounce their entitlement and trade the shares as Fully Paid Rights.

The shareholder can take up the rights and pay for the shares.

The shareholder can take up some of the rights and renounce/sell some of them.

The shareholder can 'do nothing' and take the benefit as a lazy shareholder under LR 9.5.4R

The correct answer is A. The shareholder can renounce their entitlement
and trade the shares as Nil Paid Rights. Only at the end of the offer period will
payment for the shares become due, when the person ultimately holding title to the
PAL will have to pay up to the company: hence fully paid rights.

16 / 90

Highlife plc (Highlife) has a quotation on AIM and has emailed your firm and asked for your advice as to whether there are any requirements, other than those set out in Article 19 of the UK Market Abuse Regulation ("MAR"), that Highlife, its directors or senior management should comply with as regards dealings by their directors or senior management in Highlife's shares. Which one of the following best summarises the correct advice that you should give?

There are no applicable requirements other than those set out in UK MAR, Article 19.

The AIM Rules prescribe a shorter "closed period" than under UK MAR, Article 19 during which dealings by directors and applicable employees may not take place.

Under AIM Rules Highlife must have in place a dealing policy for its directors and applicable employees setting out the requirements and procedures relating to dealings in any of its AIM securities.

Under AIM Rules the dealing policy need only extend to directors and not senior management having access to inside information.

That is correct. C is the correct answer. See AIM Rule 21. The restrictions on dealings by persons discharging managerial responsibility ("PDMRs") during "closed periods" (as defined in UK MAR, Article 19 (11)) must be complied with in any event. AIM Rule 21 is a separate and independent requirement for AIM quoted companies to have in place a dealing policy for directors and "applicable employees" (defined by reference to the definition of PDMRs in UK MAR) setting out the processes and procedures to be followed when dealing in their company's AIM securities.

17 / 90

Glowarm plc ("Glowarm") intends to raise additional equity finance through a rights issue. Its shares
are admitted to the premium segment of the Official List and are traded on the Main Market of the
London Stock Exchange.

The company has 210,900,000 shares in issue. At its last AGM the directors were granted authority to
allot new shares up to the maximum amount permitted by the Investment Association Share Capital
Management Guidelines.

Assuming no shares have been allotted since the AGM, which one of the following is the maximum
amount of shares the directors would have been granted authority to allot in connection with its
proposed rights issue?

Up to 2/3 of issued share capital i.e. 210,900,000 existing shares x 2/3 = 140,600,000 new shares

Up to 1/2 of issued share capital i.e. 210,900,000 existing shares x 1/2 = 105,450,000 new shares

Up to 1/3 of issued share capital i.e 210,900,000 existing shares x 1/3 = 70,300,000 new shares

Up to 3/4 of issued share capital i.e 210,900,000 existing shares x 3/4 = 158,175,000 new shares

The correct answer is A. Under the IA Share Capital
Management Guidelines, authority to allot up two thirds of issued share capital will be
regarded as routine provided any amount in excess of one third is used for fully preemptive rights issues only

18 / 90

Under Article 19 (12) (a) of the UK Market Abuse Regulation PDMRs may be given permission to deal during a closed period on a case by case basis due to exceptional circumstances such as severe financial difficulty requiring an immediate sale of the shares. In order to take advantage of this exemption the PDMR concerned must make a reasoned written request to the issuer explaining why the sale of the shares is the only reasonable alternative to obtain the necessary financing. Is this latter statement true or false?

True

False

see Treasury Regulation: Articles 7 and 8 of Commission Delegated Regulation EU 2016/522, implemented in UK law pursuant to Article 19 (13) MAR for details of what such a request should include.

Yes - that is correct. The statement is true - see Treasury Regulation: Articles 7 and 8 of Commission Delegated Regulation EU 2016/522, implemented in UK law pursuant to Article 19 (13) MAR for details of what such a request should include.

19 / 90

Which of the following is a continuing obligation which an AIM quoted company MUST comply with?

Rules for Related Party Transactions in Chapter 11 Listing Rules

Market abuse restrictions in the UK Market Abuse Regulation

UK Corporate Governance Code

The correct answer is B.
The Listing Rules do not apply to AIM companies. They do not have to follow the UK
Corporate Governance Code but must state which "recognised code of corporate
governance" they intend to apply.

20 / 90

TechPlan plc ("Techplan") is proposing to apply for its shares to be admitted to the premium segment of the Official List and to trading on the Main Market of the London Stock Exchange. It currently has no shares listed on the Official List. Which one or more of the following requirements must Techplan comply with in order to meet the eligibility requirements of the Listing Rules? You may assume that the FCA will not dispense with any requirements or grant any concessions from the usual requirements of the Listing Rules.

Must have audited accounts relating to a period of at least three years.

Must satisfy the FCA that it has sufficient working capital to meet its requirements for the 12 months following publication of its prospectus

A sufficient number of the company's shares must, by the time of admission, be distributed to the public.

Must be able to demonstrate that it carries on an independent business as its main activity.

A sufficient number of the company's shares must, by the time of admission, be distributed to the public.

The correct references are: A - (LR 6.2.1R) B - (LR 6.7.1R) C - (LR 6.14.1R) D - (LR 6.4.1R) Note that these requirements do NOT apply in the circumstances mentioned in LR 6.1.1R (1) or (2) e.g. where the company already has a premium listing of equity shares and is seeking admission to listing of new shares of the same class and is not entering into a transaction that would be classified under the Listing Rules as a "reverse takeover". Note further that, if sufficient shares cease to be in public hands, the FCA has the right to cancel the listing in accordance with Listing Rule 5.2.1R (which should be read with the guidance note LR 5.2.2G). Premium listed companies must have sufficient shares in public hands at all times (LR 9.2.15R). It is therefore a continuing obligation that applies as long as the company remains a premium listed company.

21 / 90

If a company with a premium listing fails to implement all the requirements of the UK Corporate Governance Code without giving any explanation in its annual report for its failure to do so, it will be in breach of the UK CGC. True or false?

True

False

Correct. The Code is not mandatory but contains recommendations. Under Listing Rule LR 9.8.6R (5) and (6) however, the company must "comply or explain"; that is it must comply with the Code (and explain how it has done so) or explain where it has not complied and why. Failure to give such an explanation would itself be a breach of the Listing Rules. Note also the requirement under DTR 7.2 to include a corporate governance statement in the directors' report.

22 / 90

BrandX plc (“BrandX”) has launched a rights issue to raise additional finance to fund
an acquisition. BrandX is a premium listed company with shares traded on the Main
Market of the London Stock Exchange.
BrandX’s directors do not have authority to issue sufficient new shares required for
the rights issue. They have therefore called a general meeting of BrandX to obtain
the appropriate authority from BrandX’s shareholders. In order to keep underwriting
costs to a minimum BrandX is keen to make the rights offer as soon as possible.
Which ONE of the following is the EARLIEST date by which BrandX can post
provisional allotment letters to shareholders or credit CREST accounts?

Simultaneously with the posting of the notice of general meeting.

Ten business days after the posting of the notice of general meeting.

Immediately after the general meeting or any adjournment thereof at which the resolution authorising the allotment of shares is passed.

Three business days after the general meeting or any adjournment thereof.

To be listed securities must have any necessary statutory consents (LR
2.2.2R). The FCA will not list on a conditional basis. Therefore PALs
cannot be posted and trading in the nil paid rights commence until the
shares have been authorised. The earliest date is therefore C.
Wrong answers: A, B and D – see correct answer.

23 / 90

A prospectus may either take the form of a single document or be drawn up in three separate parts, referred to in the UK Prospectus Regulation as a summary, registration document and a securities note. Indicate whether the following statement is true or false.

True

False

That's right, the statement is false. The three part format was designed to give greater flexibility. But even if the document is drawn as a single document (which remains the most popular method) it must still include a summary (See Art. 7 (1) UK Prospectus Regulation).

24 / 90

Which ONE of the following is a CORRECT summary of the effect of the UK
Corporate Governance Code (“UK CGC”)?

The UK CGC is a purely voluntary code and UK companies with shares admitted to the premium segment of the Official List are not obliged to disclose whether or not they comply with it.

The Listing Rules require only UK incorporated companies with a premium listing to disclose in their annual report how they have complied with the UK CGC.

The Listing Rules require both UK incorporated companies and overseas companies with a premium listing to disclose in their annual report how they have complied with the UK CGC and the reasons for any non-compliance.

The UK CGC applies only to UK premium listed companies in the FTSE 100.

The “comply or explain” provisions of LR 9.8.6R (5) and (6) which apply to
UK premium listed companies are extended by LR 9.8.7R to overseas
companies with a premium listing.
Wrong answers: A: see LR 9.8.6R (5) and (6); B: See LR 9.8.7R; D: the
UK CGC applies to all premium listed companies although there are some
modified provisions for “smaller companies” below the FTSE 350 level.

25 / 90

Which of the following combinations of Annexes to the UK version of Commission Delegated Regulation (EU) 2019/980 "PR Regulation") contains the minimum information that should be included in a prospectus for equity shares issued in connection with an IPO in the UK, assuming the prospectus included pro-forma financial information?

Annexes 3 and 12

Annexes 7 and 11

Annexes 1, 11 and 20.

Annexes 1 and 14

That's right - C is correct. Annex 1 contains the minimum disclosure requirements for the Registration Document for equity securities, Annex 11 contains the minimum disclosure requirements for the Securities Note and Annex 20 sets out the requirements for Pro Forma Information.

26 / 90

350,000,000 new shares

375,000,000 new shares

400,000,000 new shares

4200,000,000 new shares

27 / 90

10 business days.

14 days.

21 clear days.

10 clear days.

28 / 90

Daniel is a senior executive of Fulton plc ("Fulton"). The shares of Fulton are listed on the premium segment of the Official List and traded on the Main Market of the LSE. Daniel is concerned that he and/or his close associates may be liable to sanctions for failure to comply with rules relating to dealing in Fullton's shares. You are advising Daniel in a meeting, explaining how the law applies to him and his close associates. Which one of the following statements of advice is WRONG?

Only PDMRs, which includes non-director senior executives with regular access to inside information and power to make managerial decisions, are liable for dealing in Fulton shares during a closed period contrary to Article 19 (11) UK MAR.

A senior executive is likely to face serious disciplinary consequences for a breach of any internal code of dealing imposed on him/her by Fulton pursuant to his/her service contract.

A senior executive will be classed as a PDMR but they are only ever censured under s91 Financial Services and Markets Act 2000 so there is little for Daniel to be concerned about as concerns receiving a fine from the FCA.

A senior executive may be classed as a PDMR, in which case both he and persons closely associated with him may be liable for sanctions under s123 of FSMA 2000 for breach of disclosure obligations under UK MAR, Article 19 (1).

C is incorrect advice. A is correct advice since UK MAR, Article 19 (11) only applies to PDMRs and not those closely associated with them - contrast disclosure obligations under Article 19 (1). B correctly states the standard commercial practice/contractual provisions for PDMRs. C is incorrect since not all senior executives will be classed as PDMRs - see Article 3 (1) (25) UK MAR for the further requirements needed - and because s91 FSMA 2000 does not apply to breaches of UK MAR. D is correct - see Article 19 (1) UK MAR.

29 / 90

Which ONE of the following is an ACCURATE summary of the obligations of an AIM
quoted company (“AIM Company”) and its directors regarding dealings by the
directors in their own AIM Company’s securities?

Directors of AIM Companies are not subject to the restrictions on dealings during ‘closed periods’ contained in Article 19 of the Market Abuse Regulation (“MAR”).

The AIM Rules for Companies (“AIM Rules”) contain a code of dealing for directors that overrides the obligations arising under MAR.

A director of an AIM Company need not notify the AIM Company of transactions carried out on his/her own account under Article 19 MAR but cannot deal on their own account during ‘closed periods’.

Under the AIM Rules an AIM Company must have in place a code of dealing for its directors and both the AIM Company and its directors must comply with their obligations under Article 19 MAR.

AIM is a UK MAR regulated trading venue. AIM Rule 21 includes a
requirement for a code of dealing but compliance with this does not affect
the obligations under UK MAR, Article 19 (see Guidance Notes to AIM
Rules).
Wrong answers: A, B and C.

30 / 90

Which of the following are not "equity securities" within the meaning of s560 Companies
Act 2006?

Ordinary shares.

Shares which entitle the holder to a return of up to par value on a winding up, subject to repayment of debt, and an annual dividend of 5% of par value, subject to distributable reserves.

Loan notes that are convertible into ordinary shares at the option of the note holder.

'Warrants' that entitle the warrant holders to subscribe for new ordinary shares in the issuer on a specified future date at a favourable price calculated in accordance with a prescribed formula.

See s560 CA 2006.

31 / 90

Martin's civil partner, Andrew.

Underwoods Ltd, a private company wholly owned by Martin.

Martin's uncle Phillip who has never shared the same household as Martin.

Martin's 6 year old daughter Francesca by a previous marriage.

32 / 90

It is a requirement for a successful application for a premium listing of shares that a "sufficient number" of the shares will be distributed to the public. Which one of the following percentages of shares in public hands will generally be held to meet this requirement?

10 percent.

20 percent.

25 percent.

51 percent.

Correct - see Listing Rules 6.14.1R and 6.14.2R (2). Note also what counts as being in public hands for this purpose and the circumstances in which shares held by directors and persons connected with them will not be regarded as being in public hands.

33 / 90

Under the Listing Rules a company with a premium listing must notify the FCA if less than 10% of its shares are no longer in public hands. Which one or more of the following categories of shareholders in a premium listed company will automatically NOT be considered to be "public hands"?

A director of the listed company

A person connected with a director of the listed company

A person who, under any agreement, has a right to nominate a person to be a director of the listed company

A person who, under the Disclosure Guidance and Transparency Rules (DTR 5.1.2R), has notified an interest in 3% of the voting rights of the listed company.

Well done. The obligation to notify the FCA is under LR 9.2.23R, but to answer this correctly you need to refer back to LR 6.14.3R which expressly covers directors, persons connected with directors and persons entitled to nominate directors (Options A, B and C). "Major" shareholdings are also excluded. The threshold for this purpose however is set at 5% (LR 6.14.3 R (1) (e)) rather than the 3% threshold in DTR 5.1.2R

34 / 90

Which of the following types of activity by an individual do not constitute insider dealing
by an individual contrary to the provisions of Part V of the CJA?

Dealing on a regulated market in price affected securities while in possession of price sensitive information in relation to those securities.

Obtaining price sensitive information from another person.

Encouraging another person to deal on a regulated market in price affected securities.

Disclosing price sensitive information to another person otherwise than in the proper performance of the individual's employment, office or profession.

The three offences described in A,C and D are set out in s52(1) and (2) CJA.
Note that, unlike market abuse, these offences can only be committed by an
individual, although a company may be guilty of aiding and abetting an offence.

35 / 90

For the purpose of the definition of "inside information" in Article 7 UK MAR the information must be
information which is not generally available but which if it were generally available would be likely to
have "a significant effect" on the price of the relevant financial instruments.

In this context consider whether the following statement is true or false:

Information would be likely to have a significant effect on price if, and only if, there is a verifiable
movement in the price of the financial instrument once the information is made public.

True

False

The test is whether the information is of a kind which a reasonable investor would be
likely to use as part of the basis for his investment decision (Article 7 (4) UK MAR).
See also the guidance in the Disclosure Guidance and Transparency Rules at DTR
2.2.4G - 2.2.6G on the interpretation of the "reasonable investor" test.

36 / 90

Predator Plc's ordinary shares are admitted to the premium segment of the Official List and to trading
on the London Stock Exchange's Main Market. It proposes to acquire the whole of the issued share
capital of Target Limited. The consideration will be satisfied by the issue of ordinary shares of Predator
to the shareholders of Target who will, on completion of the acquisition, own 51% of the enlarged
issued ordinary share capital of Predator.

For the purpose of the Listing Rules the transaction will be classified as:

A Class 2 transaction.

A related party transaction.

A reverse takeover.

A Class 1 transaction.

You have correctly applied the definition of 'reverse takeover' in the
Listing Rules (LR 5.6).

37 / 90

One third of the listed company's issued share capital.

Half of the listed company's nominal share capital.

One third of the listed company's issued share capital plus a further one third to be issued in connection with a rights issue.

Three quarters of the listed company's issued share capital.

38 / 90

Which ONE of the following is NOT a notification which, under the Listing Rules, a listed company is obliged to disclose to the market through an RIS?

Notification of a change of name.

Notification of a change of accounting reference date.

Notification of board changes and directors' details.

Notification that the company has filed copies of circulars, notices, reports with FCA.

Notification (annually) of the list of shareholders

Notification of proposed changes to capital structure

G. Notification of all resolutions (other than those relating to ordinary business at an annual general meeting) passed by the company in general meeting

Yes, you are right. You have correctly applied LR 9.6. Option E is not a requirement of the Listing Rules, but under s856 CA 2006 a list of shareholders must be included in a company's annual return which has to be filed with the Registrar of Companies.

39 / 90

Parmiter plc, a UK premium-listed company, is proposing to enter into a transaction to acquire a
business from Ascot Limited. John Davis, a director of Parmiter, is also a shareholder of Ascot.

The transaction may be a related party transaction for Parmiter if John owns at least 30% of the voting
shares in Ascot.

True or false?

True

False

Refer to Listing Rule 11.1.4R (5) and the definition of "associate" in
Listing Rules Appendix 1.1

40 / 90

Assume that George told Lucas about the slump in Innov8's profits.
Lucas will not infringe Article 14 (a) UK MAR, as he could not be classified as an "insider".

True or False?

True

False

41 / 90

If a company wants to make an offer of equity securities complying with s561 Companies Act 2006 to
an overseas shareholder with no registered address in the UK, and who has not given to the company
an address for service of notices on him, it may do so by placing an advertisement in the
London Gazette stating where a copy of the offer may be obtained.

True or false?

True

False

The authority is contained in s562(3) CA 2006.

42 / 90

Which two of the following statements about "insider lists" are true?

Insider Lists must be retained for at least 5 years.

A listed company or a person acting on its behalf must draw up a list of all persons working for them under a contract of employment or otherwise who have access to inside information.

The company must require those of its professional advisers with access to inside information about the company to notify the company on each occasion a new member of staff gains access to such information.

If a firm of solicitors acting on behalf of a listed company fails to comply with the obligation to draw up and maintain an insider list, the company itself is not liable.

The relevant requirements are set out in Article 18, UK MAR.
With regard to statement C, this is not an explicit requirement of Article 18 UK MAR,
but in view of the responsibility placed on the company, it is probably good practice.
In respect of statement D, note that Article 18 (2) UK MAR explicitly places
responsibility firmly on the issuer for the maintenance of insider lists and not its
agents or advisers.

43 / 90

Indicate whether the following statement is true or false: The London Stock Exchange plc is a 'recognised investment exchange' and therefore exempt from the general prohibition in section 19 of the Financial Services and Markets Act 2000 from carrying on a 'regulated activity

True

False

That's right. The London Stock Exchange has been granted a 'recognition order' as a 'recognised investment exchange' under section 285 of the Financial Services and Markets Act 2000 and is therefore exempt from the general prohibition as regards regulated activities which are carried on as part of the Exchange's business.

44 / 90

ARG Foods plc (ARG) is proposing a rights issue to raise funds to develop its research and
development facilities.
Assume that:

23 August

25 August

30 August

1 September

45 / 90

Python plc (“Python”) is considering whether to apply for its ordinary shares to be
admitted to the Official List. It currently has no shares admitted to listing.

Its ordinary shares must be admitted to trading on the Main Market of the London Stock Exchange.

The expected market capitalisation of the shares on listing must be at least £700,000.

There must not be any ordinary shares in issue that are not listed.

It must be able to demonstrate that it will be carrying on an independent business as its main activity.

46 / 90

Naivasha plc is a company quoted on AIM. It has two main divisions comprising a travel agency and a
charter airline. The directors of Naivasha plc have decided to sell the charter airline business for £60
million to Tropik SA, a French company. According to its most recent audited annual accounts,
Naivasha plc made a profit of £25 million of which £24 million came from the travel agency business
and a further £1 million from the charter airline business. Naivasha plc has 90 million ordinary shares
in issue. The current market price of Naivasha plc's shares is £5. Which one of the following
statements about the sale of the charter airline is correct?

The sale of the charter airline will require the approval of Naivasha plc's shareholders by way of ordinary resolution because the sale is a substantial transaction for Naivasha plc under AIM Rule 12 having applied the profits and consideration class tests.

The sale of the charter airline is a substantial transaction for Naivasha plc under AIM Rule 12 requiring a notification of the sale because of the application of the profits test only.

The sale of the charter airline is a related party transaction under AIM Rule 13 for the directors of Naivasha plc because they own shares in Naivasha plc.

The sale of the charter airline is a substantial transaction for Naivasha plc under AIM Rule 12 because of the application of the consideration class test only.

D is the rght answer.
This is a transaction for Naivasha plc. The profits test produces a percentage of 4%
(£1m/£25m x 100). The consideration test produces a percentage of 13.3% (£60m/
£450m x 100 (450m = 90m shares x £5)). As a result of only the consideration test
being over 10% this is a substantial transaction for Naivasha plc under AIM Rule 12
and it must issue a notification of the transaction. The AIM Rules do not require an
ordinary resolution of the shareholders. It is not an RPT as the sale is not to the
directors.

47 / 90

Which of the following must a private company comply with in order to be re-registered as a public company?

Pass a special resolution.

File an application with the Registrar of Companies.

Have an allotted share capital with a nominal value of not less than £50,000.

File a balance sheet showing that at the balance sheet date the amount of the company's net assets was not less than the amount of its called up share capital and undistributable reserves

Change its name so that it is consistent with being a public company.

Well done - private companies seeking seeking admission to the Official List will have to re-register as public companies. The requirements for re-registration are set out in sections 90-96 CA 2006.

48 / 90

Hedley does not need to issue a prospectus.

Hedley must issue a prospectus because the new ordinary shares are to be admitted to trading on the Main Market of the LSE.

Hedley does not need to issue a prospectus because a placing is not an offer of securities to the public.

Hedley needs to issue a prospectus because the offer is not made to “qualified investors” only

49 / 90

Under Listing Rule 9.3.11R, holders of "ordinary shares" in a premium-listed company are entitled to
be offered "equity securities" on an issue of "equity securities" as each expression is defined in section
560 Companies Act 2006. True or false?

True

False

The statement is false. Under LR 9.3.11R, holders of "equity shares" in
a premium-listed company only are entitled to be offered "equity securities" on an issue
of "equity securities". Under the statutory pre-emption right (s561 CA 2006) holders of
"ordinary shares" are entitled to be offered "equity securities" on a pre-emptive basis.
The Listing Rules definition of "equity securities" however is narrower than the s560 CA
2006 definition of "equity securities" in that it doesn't include rights to subscribe for
ordinary shares.

50 / 90

Which two of the following may be appropriate to avoid Nova's obligation to offer the new shares first
to its existing shareholders?

Special resolution under s570 disapplying the statutory pre-emption rights under s561

A waiver by all the existing shareholders of their rights under s561 CA 2006.

Ordinary resolution to alter the articles of association of Nova to permit the allotment of shares disregarding the provisions of s561CA 2006.

Ordinary resolution under s551 CA 2006 authorising the directors to allot shares.

51 / 90

George is the finance director of Innov8 plc, a UK listed company. He has just discovered
that Innov8's interim profits for the first half year are worse than predicted. He decides to
sell a significant number of his shares. Which one of the following combinations of the UK
Market Abuse Regulation ("UK MAR") provisions is most likely to require consideration by
the FCA for the purpose of founding a market abuse claim against George?

Articles 8 and 14 (a) UK MAR.

Articles 10 and 14 (c) UK MAR.

Articles 8 and 14 (b) UK MAR.

Articles 12 and 15 UK MAR.

Under Article 8 UK MAR, the offence of insider dealing is committed where a person
possesses inside information and uses that information for the purpose of buying or
selling financial instruments to which that information relates. It would of course first be
necessary to establish that the information about the first half profits meets the test of
"inside information" (Article 7).
Option B: Articles 10 and 14 (c) establish the offence of unlawful disclosure of inside
information - no indication on the facts that George has disclosed inside information to
another person.
Option C: Article 14 (b) prohibits recommending or inducing another person to engage
in insider dealing.
Option D: Articles 12 and 15 deal with the offence of market manipulation, which does
not seem to be relevant on the facts.

52 / 90

Which ONE of the following is NOT a listing principle applicable to a company with a
premium listing (the “Company”)?

The Company must act in an open and co-operative manner with other premium listed companies operating in the same business sector

The Company must take reasonable steps to establish and maintain adequate procedures, systems and controls to enable it to comply with its obligations.

The Company must ensure it treats all holders of the same class of its listed equity shares equally.

The Company must communicate information to holders of its listed equity shares in such a way as to avoid the creation of a false market in those listed equity shares.

Listing and Premium Listing Principles (LR 7.2.1R and 7.2.1AR) both
apply to premium listed companies. Option A is not a requirement of
either.
Wrong answers: B: see Listing Principle 1; C: see Premium Listing
Principle 5; D: see Premium Listing Principle 6.

53 / 90

The ordinary shares of Trans Europe plc (the “Company”) are traded on the AIM
market of the London Stock Exchange.

Which ONE of the following statements is a CORRECT summary of the Company’s
obligations under the Market Abuse Regulation (“MAR”) with regard to the
maintenance of insider lists?

The Company must draw up an insider list in accordance with Article 18 (1) MAR and retain it for a period of at least five years after it is drawn up or updated.

The Company is not obliged to draw up an insider list in accordance with Article 18 (1) MAR but must be able to provide the Financial Conduct Authority, on request, with an insider list.

The minimum period for which the Company must maintain an insider list in accordance with Article 18 MAR is three years.

The Company must maintain an insider list in accordance with Article 18 (1) MAR but is exempt from requiring persons on it to provide written acknowledgement of their responsibilities regarding market abuse.

AIM is classified as an “SME growth market” (see Introduction to the AIM
Rules). The company is therefore entitled to the exemption in Article 18
(6) UK MAR but must be able to produce an insider list on request by the

FCA.
Wrong answers A, C and D

54 / 90

Following on from Question 3, assume that George suggested to his friend, Lucas, that Lucas should
sell his 200 shares in Innov8. Lucas's shareholding represents a 0.001% stake in the company.

Article 10 and 14 (c)

Articles 12 and 15

Articles 8 and 14 (a)

Articles 8 and 14 (b).

55 / 90

Indicate whether the following statement is true or false: An application for admission to trading of any class of securities must relate only to securities which are listed or the subject of an application for listing.

True

False

That's right. See the Guidance Note to Condition 2.1 of the Admission and Disclosure Standards. See also the counterpart requirements of Listing Rule 2.2.3Rwith regard to admission to listing.

56 / 90

Fresno plc has shares which have been admitted to trading on the Main Market of the
London Stock Exchange.

Indicate whether the following statement is true or false:

A sale and purchase of Fresno shares between two individuals which does not take place on the
London Stock Exchange (i.e. it is "off market"), may nevertheless amount to market abuse.

True

False

57 / 90

A rights issue is defined in the Listing Rules as an offer made to existing security holders to subscribe
or purchase further securities in proportion to their holdings made by means of the issue of
a renounceable letter (or other negotiable instrument) which may be traded (as "nil-paid rights") for a
period before payment for the securities becomes due.

True or false?

True

False

The Listing Rules definition of 'rights issue' can be found in LR
App 1.1.

58 / 90

Assuming Parmiter's acquisition of Ascot (Question 1) is a
Related Party Transaction and, on the application of the Class Tests, at least one
percentage ratio exceeds 25% , which of the following apply to the circular required to be
issued by Parmiter?

The circular must contain all the information in LR 13.3 and 13.6.

The circular should only contain the information required by LR 13.3.

The circular should contain a statement by the board that the transaction is fair and reasonable so far as the shareholders are concerned and they have been so advised by a sponsor.

Where appropriate financial information about the asset being acquired or disposed of is not available, an independent valuation of that asset is required.

For A, see Listing Rule 13.3 and
13.6;

For C see Listing Rule 13.6.1R(5);

For D, see Listing Rule
13.6.1R(4).

For A, see Listing Rule 13.3 and
13.6;

For C see Listing Rule 13.6.1R(5);

For D, see Listing Rule
13.6.1R(4).

For A, see Listing Rule 13.3 and
13.6;

For C see Listing Rule 13.6.1R(5);

For D, see Listing Rule
13.6.1R(4).

59 / 90

An "RIS" includes an organisation approved by the Financial Conduct Authority as a Primary Information Provider (PIP) to disseminate regulatory information to the market. True or false?

True

False

Yes, that's right. "RIS" stands for regulated information service RNS is the name of the RIS provided by the London Stock Exchange, but there are a number of other approved RISs including Business Wire and First Sight. You will find a list of them on the FCA website. SIPs (or secondary information providers) take information from an RIS and repackage it. They are not approved by the FCA but include a number of well known organisations such as Bloomberg and Reuters. An RIS does not need to be FCA-approved. If can be approved by another EEA Member State or if not approved it must comply with DTR 6.3.3BR

60 / 90

Which two or more of the following are exempt under the Prospectus Regulation from the general requirement to publish a prospectus in connection with offers of securities to the public in the UK?

Offers to qualified investors only.

Offers made to fewer than 150 persons in the UK, other than qualified investors.

Offers of securities made in connection with a takeover provided a document containing information describing the transaction and its impact on the issuer is made available to the public.

That's right. They are all exempt under provisions of the Prospectus Regulation. The relevant authorities are:

A - Art. 1 (4) (a) Prospectus Regulation. See Art. 2 (e) Prospectus Regulation for the meaning of 'qualified investors'.

B - Art. 1 (4) (b) Prospectus Regulation.

C - Art. 1 (4) (f). The minimum information required to be included in such a document is prescribed by Level 2 regulations made under Art. 1 (7).

D - Art. 1 (4) (i) Prospectus Regulation.

61 / 90

Which one of the following accurately describes how the proposed acquisition of Firesafe would be
classified under the Listing Rules?

A Class 1 transaction.

A reverse takeover.

A related party transaction.

A Class 2 transaction.

62 / 90

Which of the following continuing obligations apply BOTH to a premium listed Main Market company
and to an AIM-quoted company?

Certain restrictions on directors' share dealings

Making a public announcement of inside information concerning the company

Making a public announcement of a transaction involving the company which is sufficiently large in relation to its size

Having a financial adviser to advise the company

They all apply.
A is a restriction imposed by Article 19 (11) of the Market Abuse Regulation
("MAR")
B is required by Article 17 MAR
C is required by Chapter 10 Listing Rules for a premium listed company and AIM
Rule 12 for an AIM company
D is required by Chapter 8 Listing Rules for a premium listed company (sponsor)
and AIM Rule 1 for an AIM company (Nomad)

63 / 90

Market abuse under the UK Market Abuse Regulation (UK MAR) may involve the misuse by insiders of "inside information". Under Article 17 of UK MAR listed companies are under an obligation to inform the public of "inside information" that directly concerns them as soon as possible. Indicate whether you think the following statement is true or false:
For the purpose of the civil offence of market abuse under UK MAR and Article 17, UK MAR "inside information" means the same thing.

True

False

That's correct. The definition is in Article 7 UK MAR.

64 / 90

Companies seeking a quotation of their shares on AIM must have at least 25% of their shares in public hands after the IPO and have at least a 3 year trading record. True or false?

True

False

That is correct. There is no minimum percentage requirement for shares in public hands or minimum trading period required in order for a company to join AIM.

65 / 90

Reichstampf can ‘passport’ its German prospectus into the UK.

Reichstampf must publish a separate prospectus in the UK complying with the Prospectus Regulation Rules and approved by the Financial Conduct Authority (“FCA”).

If Reichstampf wishes to ‘passport’ its prospectus into the UK the FCA must require that the summary of the prospectus is made available in English.

66 / 90

The proposed issue exceeds the maximum number of shares authorised for allotment by the authority obtained at the AGM.

The rights issue will be made via the Gazette Route.

The rights issue will fund a takeover which will be a class one transaction.

The rights issue will fund a related party transaction.

67 / 90

Indicate whether the following statement is true or false.

The main difference between a rights issue and an open offer is that an open offer is not made on a
pre-emptive basis.

True

False

The statement is false.
Both types of secondary issue are made to existing holders in proportion to their
existing holdings.
The main difference is that a rights issue is made using a renounceable letter, which is
a negotiable instrument that can be traded 'nil paid' for a period before payment for the
shares or other securities is due; an open offer is made using an application form that
cannot be dealt with in this way.

68 / 90

Companies are required to publish their annual and half-yearly reports within specified periods after the end of the financial period to which they relate. Indicate whether the report specified in each row of the left hand column is correctly paired with the period after the end of the relevant accounting reference period within which the report must be filed specified opposite each report in the right hand column.

A. A listed company's annual financial report Six months

B. A private company's annual report and accounts Nine months

C. A listed company's half-yearly report Three months

D. A public company's annual report and accounts Six months

True

False

Well done. Row A is incorrect - the correct answer should be six months. The correct matches and relevant authorities can be found in the Disclosure Guidance and Transparency Rules and the Companies Act 2006 as follows:

A - DTR 4.1.3R

B - s442 (2) (a) CA 2006

C - DTR 4.2.2R (2)

D - s442 (2) (b) CA 2006

69 / 90

The first draft of the prospectus should be submitted to the Financial Conduct Authority (“FCA”) for approval annotated in the margin to show compliance with Prospectus Regulation Rules.

See Article 24 (5) PR Regulation and PRR 3.1.3 R.
Wrong answers: A – see correct answer; C – approval of the prospectus is
by the Financial Conduct Authority; D – see correct answer.

70 / 90

Supernova plc's shares are quoted on AIM. Which of the following rules will apply to Supernova while it is on AIM?

Nomad Rules

Prospectus Regulation Rules

Listing Rules

DTR 5

AIM Rules

71 / 90

Indicate whether the following statement is true or false. If an offer of securities to the public in the UK is exempt from the requirement to produce a prospectus, there is no need to publish a prospectus in connection with an application for those securities to be admitted to trading on a UK regulated market such as the London Stock Exchange's Main Market.

True

False

The obligation to publish a prospectus is set out in Article 3 of the Prospectus Regulation. If there is an offer to the public made to persons in the UK and/or an application for shares to be admitted to trading on a regulated market in the UK it will also be covered by s85 Financial Services and Markets Act 2000 ("FSMA 2000"). Art. 3 (1) deals with offers to the public; Art. 3 (3) deals with applications for admission to trading. They are separate and independent requirements. Exemption from one will not automatically confer exemption from the other, although there are some common grounds of exemption under Article 1 of the Prospectus Regulation. An offer to the public for example, may be exempt on the ground that it is made to 'qualified investors' only (Art. 1 (4) (a)) but this will not exempt it from the requirement to produce a prospectus if the securities are to be admitted to trading on a regulated market unless there is a separate exemption available in respect of that application. The equivalent provisions under FSMA 2000 are s85 (1) and s85 (2).

72 / 90

The London Stock Exchange's AIM market is a "regulated market" for the purposes of the UK Prospectus Regulation. True or false?

True

False

AIM is an "MTF" or "Multilateral Trading Facility".The LSE's Main Market is a "regulated market".

73 / 90

A prospectus may be drawn up as a single document or as separate documents comprising : the Summary; the Registration Document and the Securities Note. The Summary can often be the only part of a Prospectus that many investors read. Which one of the following statements about a Summary is INCORRECT?

A person is not subject to civil liability solely on the basis of information contained in a prospectus unless the summary, when read with the prospectus taken as a whole is misleading, inaccurate or inconsistent or does not provide key information such as the risks associated with the investment.

The summary can cross refer to other parts of the prospectus and may incorporate information by reference.

The summary cannot normally exceed seven sides of A4 sized paper when printed.

The summary must include a warning that any decision to invest should be based on a consideration of the prospectus as a whole.

Well done - option B is incorrect. The content and format of the summary are governed by Article 7 of the Prospectus Regulation. Article 7 (11) provides that the summary shall not contain cross-references to other parts of the prospectus or incorporate information by reference. Note however that it is permissible to incorporate information by reference in other parts of the prospectus (see Article 19 Prospectus Regulation). This rule is designed to protect investors. As the Summary is often the only part of the Prospectus that investors (particularly retail investors) will read, it is important that it is a self-contained document. Option A is correct - see Article 11 (2) Prospectus Regulation and s90 (12) FSMA 2000. Option C is correct - see Article 7 (3) Prospectus Regulation. Option D is also correct - see Article 7 (5) Prospectus Regulation.

74 / 90

Article 18 of the UK Market Abuse Regulation ("MAR") imposes certain obligations regarding the maintenance of insider lists. Which one of the following statements about insider lists is INCORRECT?

If a firm of solicitors acting on behalf of a company draws up and maintains the insider list, the company itself will still be liable for breach of Article 18.

Insider lists must be maintained for at least five years.

The issuer or any person acting on its behalf must take all reasonable steps to ensure that persons on the insider list acknowledge in writing the the legal and regulatory duties entailed and is aware of the sanctions for insider dealing and unlawful disclosure of inside infomation.

AIM companies are exempt from the requirement to maintain insider lists and the Financial Conduct has no power to require them to produce one

Under Article 18 (6) UK MAR, companies with shares admitted to an "SME growth market" are exempt from the requirement to draw up insider list. AIM was registered as a SME growth market on 3 January 2018 (see Introduction to the AIM Rules). The exemption however is subject to the conditions mentioned in Article 18 (6) (a) and (b). Article 18 (6) (b) provides that the issuer must be able to provide the competent authority (FCA in the UK) upon request with an insider list. Option A - Article 18 (2) clearly states that where another person acting on behalf of the issuer takes responsibility for drawing up and updating the insider list, the issuer remains fully responsible for complying with the Article. Query, what is the position of the person acting on its behalf if there is a failure to comply? Option B - see Article 18 (5). Option C - see Article 18 (2) first paragraph

75 / 90

For how long must its offer remain open to acceptance?

10 business days

10 clear days

14 days

14 clear days

76 / 90

Which one of the following most accurately describes an "insider list" for the purposes of the UK Market Abuse Regulation?

A list of people likely to have inside information and which must be published on a regulatory information service.

A list of outside advisers of a listed company who may come into possession of inside information relating to the company

A list drawn up by an issuer of financial instruments or someone acting on its behalf of all persons who have access to inside information and who are working for them under a contract of employment or otherwise performing tasks through which they have access to inside information, such as advisers, accountants or credit rating agencies

A list of all persons who were, directly or indirectly, responsible for the drafting of a prospectus on the basis of which a company applies for admission to the official list.

Correct, as set out in Article 18, UK MAR

77 / 90

78 / 90

Optofibre plc was incorporated in 2005. Optofibre is already highly geared and does not wish to
increase its borrowings. It is now proposing to make a rights issue to raise cash to develop a new
factory in Swindon. Which of the following are reasons why Optofibre may require shareholder
approval in order to make the rights issue?

It may need to amend its articles to remove any restriction on the number of shares it can issue.

It may need to authorise its directors to allot the new shares.

It may wish to disapply pre-emption rights.

The factory development requires shareholder approval.

The factory development (D) would normally be a matter for the
board to decide.

79 / 90

Which one of the following statements is correct?

A PDMR need only comply with Article 19 (1) MAR once they have been given clearance to deal under Article 19 (12) MAR.

A PDMR does not have to comply with Article 19 (1) UK MAR if permission to deal owing to exceptional circumstances was refused under Article 19 (12) UK MAR.

A PDMR must comply with Article 19 (1) UK MAR regardless of whether they have complied with Article 19 (11) UK MAR.

A PDMR will not need to comply with Article 19 (1) MAR if clearance is given under Article 19 (12) MAR.

The correct answer is C. The obligation to notify dealings under Article 19
(1) UK MAR operates independently of the restriction on dealings imposed by Article
19 (11). Therefore, PDMRs and their close assoicates must notify dealings in the
shares of the listed company regardless of the position under Article 19 (11). A PDMR
might forget to ask for clearance but this would not affect the PDMR’s obligation to then
notify the company of a dealing in its shares.

80 / 90

Following on from Question 1, which of the following are consequences of the transaction for
Soltronics?

Soltronics must send an announcement to a Regulatory Information Service.

Soltronics must send a Notice of General Meeting to its shareholders to obtain their approval of the transaction.

Soltronics must send an explanatory circular to its shareholders.

Soltronics need not observe any formalities, other than to approve the transaction at board level.

Listing Rule 10.5.1R sets out the relevant requirements.

81 / 90

Indicate whether the following statement is true or false.

The terms "listed company" and "public company" mean the same thing and can be used interchangeably.

True

False

Well done.
Feedback: Under section 4(2) Companies Act 2006 a public company is defined as a company with a Certificate of Incorporation that states it is a public company and which has complied with the registration or re-registration requirements of the 2006 Act or former Companies Acts. To be 'listed', on the other hand, a company's shares must have been admitted to the Official List maintained by the Financial Conduct Authority. In practice UK companies that are 'listed' will always be a public companies because of the prohibition on listing securities of a private company (Financial Services and Markets Act 2000 (Official Listing of Securities) Regulations 2001, Regulation 3) and the restrictions on private companies offering their shares to the public (s755 CA 2006).

82 / 90

For the purpose of insider dealing under the Criminal Justice Act 1993 (CJA), "insider" and "inside
information" are defined in the same way as for market abuse under the UK Market Abuse Regulation.

True or false?

True

False

Both regimes use the same terms but they are defined differently althought there are
similarities. Compare ss56 and 57 CJA with Article 7 and Article 8 (4) UK MAR.
An "insider" for the purpose of the CJA for example, must know that the information is
inside information; this is not always the case for the purpose of an "insider" in
relation to market abuse.

83 / 90

True

False

84 / 90

When seeking a quotation on AIM for the first time a company will have to prepare an Admission Document in accordance with the London Stock Exchange's AIM Rules. In addition a Prospectus may also be required and the Admission Document will therefore have to comply with the FCA's Prospectus Regulation Rules as well. True or false?

True

False

That is correct. An Admission Document is required for a company seeking an AIM quotation by AIM Rule 3. The need for a Prospectus is determined by the UK Prospectus Regulation and section 85 FSMA 2000. If the offer of shares by the AIM company is a public offer in the UK, a Prospectus complying with s85 FSMA 2000 and Prospectus Regulation Rules will be required as well. In practice both will be contained in one document.

85 / 90

Which of the following methods of listing will raise finance for the applicant company?

An offer for subscription.

A rights issue.

An introduction or admission of existing shares.

An intermediaries offer.

'Introduction' is a method of bringing securities to listing involving the admission of shares already in issue (sometimes used by overseas companies that have an existing listing in their home state but also want to be listed in another jurisdiction - London for example). It will not however raise new money for the company.

86 / 90

Therefore, in order to raise the desired sum by issuing shares at the stated discount to the market
price, the company will have to issue 895,875,000 new shares.

True or false?

True

False

87 / 90

Which one of the following best describes what is meant by "market abuse" under the UK Market
Abuse Regulation?

Insider dealing

Unlawful disclosure of inside information

Insider dealing and market manipulation

Insider dealing, unlawful disclosure of inside information and market manipulation.

The definitions section of UK MAR (Article 3) doesn't contain a definition of
the generic term "market abuse". However Recital (7) and Article 1 UK MAR make it
clear that for the purpose of the regulation the term should be understood as referring
to insider dealing (Article 8), the unlawful disclosure of inside information (Article 10)
and market manipulation (Article 12).

88 / 90

ndicate whether the following statement is true or false. 'The only information required to be included in a prospectus is that prescribed by the Commission Delegated Regulation (EU) 2019/980 ("PR Regulaton") and the Prospectus Regulation Rules ("PRRs").

True

False

Correct - the statement is false. The PR Regulation sets out the minimum content requirement for prospectuses, but is subject to the overriding provisions of Article 6 of the Prospectus Regulation which provides that the prospectus shall contain the "necessary information". Section 87A FSMA cross refers to Article 6 for the purpose of prospectuses to be approved by the Financial Conduct Authority. The PRRs mainly provide cross references or signposts to relevant provisions of the PR Regulation but also in clude some FCA specific rules in respect of matters delegated to the FCA under the Prospectus Regulation

89 / 90

Following on from Question 1, assume that John Davis owns 75% of the voting shares in Ascot
Limited. John ceased to be a director of Parmiter eight months ago.

The transaction is not a related party transaction from Parmiter's perspective.
True or false?

True

False

An ex-director may still be a "related party", as may an "associate" of an ex-director - see Listing Rules 11.1.4R (2) and (5).

90 / 90

For a company's shares to be admitted to the Official List, it is necessary that they are also admitted to trading on the Main Market of the London Stock Exchange or on another market of a recognised investment exchange. True or false?

True

False

That is correct. See Listing Rule 2.2.3R and the definitions of "admission to trading" and "RIE".

Your score is

The average score is 2%

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