Listing regime reform: CP 23/31 – Tranche 2 rules
04 April 2024
Transitional provisions apply to issuers:
A ‘mid-flight transaction’ is a transaction which:
(a) a significant transaction;
(b) an indemnity or similar arrangement subject to UKLR 7.4.1R;
(c) an issue by a major subsidiary undertaking subject to UKLR 7.4.3R;
(d) a reverse takeover; or
(e) a related party transaction.
From the transition date, a transaction will be classified in accordance with the criteria specified in the UKLR rather than the current Listing Rules.
An issuer can therefore cease to treat a mid-flight transaction as a significant transaction, related party transaction or reverse takeover from the transition date if it no longer qualifies as such under the UKLRs, and can cease complying with relevant obligations accordingly, for example, break fees fall out of scope of the significant transactions regime under the UKLR.
A mid-flight transaction that remains in scope of UKLR requirements will not be required to comply with any obligations in the Listing Rules that have not been carried forward to the UKLR.
For instance, shareholder approval will no longer be required for significant transactions (except for reverse takeovers) and sponsor appointment will no longer be necessary where the obligation to appoint a sponsor has not been carried forward.
However, mid-flight transactions will generally have to comply in full with all obligations relevant to the transaction in the UKLR including, for example, the UKLR notification requirements.
For RIS notification obligations under the UKLR relating to significant transactions, related party transactions and indemnities (amongst others), where an issuer has already made a RIS notification for a mid-flight transaction under the Listing Rules, a new notification must be made under the UKLRs in respect of the mid-flight transaction as soon as reasonably practicable after the transition date, but in any event prior to completion of the transaction.
If an issuer becomes aware of any material new change/matter as it affects such a circular, it must make a supplementary RIS notification in accordance with the relevant requirements in the UKLRs.
Where an obligation has not changed in substance from the Listing Rules to the UKLRs, an issuer does not need to comply twice, for example, if a reverse takeover has already received shareholder approval but has not yet completed on the transition date, approval does not need to be re-obtained after the transition date unless the terms of the transaction materially change.
The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
Readers should take legal advice before applying it to specific issues or transactions.