Part

LR Listing Rules

Chapter

Dealing in own securities and treasury shares: Premium listing

Printed on: 14/11/2024

Rulebook at: 06/04/2010

LR 12

Dealing in own securities
and treasury shares: Premium
listing

LR 12.1

Application

  • 01/07/2005

Application

LR 12.1.1

handbook-rule
This chapter applies to a company that has a premium listing of equity shares.
  • 06/04/2010

LR 12.1.2

handbook-rule

This chapter contains rules applicable to a listed company that:

  1. (1) purchases its own equity shares; or
  2. (2) purchases its own securities other than equity shares; or
  3. (3) sells or transfers treasury shares; or
  4. (4) purchases or redeems its own securities during a prohibited period; or
  5. (5) purchases its own securities from a related party.
  • 01/07/2005

Exceptions

LR 12.1.3

handbook-rule

LR 12.2 to LR 12.5 do not apply to a transaction entered into:

  1. (1) in the ordinary course of business by a securities dealing business; or
  2. (2) on behalf of third parties either by the company or any member of its group;

if the listed company has established and maintains effective Chinese walls between those responsible for any decision relating to the transaction and those in possession of inside information relating to the listed company.

  • 01/07/2005

LR 12.2

Prohibition on purchase of own securities

  • 01/07/2005

LR 12.2.1

handbook-rule

A listed company must not purchase or redeem (or make any early redemptions of) its own securities and must ensure that no purchases in its securities are effected on its behalf or by any member of its group during a prohibited period unless:

  1. (1) the company has in place a buy-back programme where the dates and quantities of securities to be traded during the relevant period are fixed and have been disclosed in a notification made in accordance with LR 12.4.4 R; or
  2. (2) the company has in place a buy-back programme managed by an independent third party which makes its trading decisions in relation to the company's securities independently of, and uninfluenced by, the company; or
  3. (3) the company is purchasing or redeeming securities other than shares or securities whose price or value would be likely to be significantly affected by the publication of the information giving rise to the prohibited period; or
  4. (4) the company is redeeming securities (other than equity shares) which, at the time of issue, set out:
    1. (a) the date of redemption;
    2. (b) the number of securities to be redeemed or the formula used to determine that number; and
    3. (c) the redemption price or the formula used to determine the price.
  • 01/07/2005

LR 12.3

Purchase from a related party

  • 01/07/2005

LR 12.3.1

handbook-rule

Where a purchase by a listed company of its own equity securities or preference shares is to be made from a related party, whether directly or through intermediaries, LR 11 (Related party transactions) must be complied with unless:

  1. (1) a tender offer is made to all holders of the class of securities; or
  2. (2) in the case of a market purchase pursuant to a general authority granted by shareholders, it is made without prior understanding, arrangement or agreement between the listed company and any related party.
  • 01/07/2005

LR 12.4

Purchase of own equity shares

  • 01/07/2005

Purchases of less than 15%

LR 12.4.1

handbook-rule

Unless a tender offer is made to all holders of the class, purchases by a listed company of less than 15% of any class of its equity shares (excluding treasury shares) pursuant to a general authority granted by shareholders, may only be made if the price to be paid is not more than the higher of:

  1. (1) 5% above the average market value of the company's equity shares for the 5 business days prior to the day the purchase is made; and
  2. (2) that stipulated by Article 5(1) of the Buy-back and Stabilisation Regulation. [Note: This Article is reproduced at MAR 1 Ann 1]
  • 01/07/2005

Purchases of 15% or more

LR 12.4.2

handbook-rule
Purchases by a listed company of 15% or more of any class of its equity shares (excluding treasury shares) must be by way of a tender offer to all shareholders of that class.
  • 01/07/2005

LR 12.4.3

handbook-guidance
Where a series of purchases are made pursuant to a general authority granted by shareholders, which in aggregate amount to 15% or more of the number of equity shares of the relevant class in issue immediately following the shareholders meeting at which the general authority to purchase was granted, a tender offer need only be made in respect of any purchase that takes the aggregate to or above that level. Purchases that have been specifically approved by shareholders are not to be taken into account in determining whether the 15% level has been reached.
  • 01/07/2005

Notification prior to purchase

LR 12.4.4

handbook-rule
  1. (1) Any decision by the board to submit to shareholders a proposal for the listed company to be authorised to purchase its own equity shares must be notified to a RIS as soon as possible.
  2. (2) A notification required by paragraph (1) must set out whether the proposal relates to:
    1. (a) specific purchases and if so, the names of the persons from whom the purchases are to be made; or
    2. (b) a general authorisation to make purchases.
  3. (3) The requirement set out in paragraph (1) does not apply to a decision by the board to submit to shareholders a proposal to renew an existing authority to purchase own equity shares.
  • 01/07/2005

LR 12.4.5

handbook-rule
A listed company must notify a RIS as soon as possible of the outcome of the shareholders' meeting to decide the proposal described in LR 12.4.4 R.
  • 01/07/2005

Notification of purchases

LR 12.4.6

handbook-rule

Any purchase of a listed company's own equity shares by or on behalf of the company or any other member of its group must be notified to a RIS as soon as possible, and in any event by no later than 7:30 a.m. on the business day following the calendar day on which the purchase occurred. The notification must include:

  1. (1) the date of purchase;
  2. (2) the number of equity shares purchased;
  3. (3) the purchase price for each of the highest and lowest price paid, where relevant;
  4. (4) the number of equity shares purchased for cancellation and the number of equity shares purchased to be held as treasury shares; and
  5. (5) where equity shares were purchased to be held as treasury shares, a statement of:
    1. (a) the total number of treasury shares of each class held by the company following the purchase and non-cancellation of such equity shares; and
    2. (b) the number of equity shares of each class that the company has in issue less the total number of treasury shares of each class held by the company following the purchase and non-cancellation of such equity shares.
  • 01/07/2005

Consent of other classes

LR 12.4.7

handbook-rule

Unless LR 12.4.8 R applies, a company with listed securities convertible into, or exchangeable for, or carrying a right to subscribe for equity shares of the class proposed to be purchased must (prior to entering into any agreement to purchase such shares):

  1. (1) convene a separate meeting of the holders of those securities; and
  2. (2) obtain their approval for the proposed purchase of equity shares by a special resolution.
  • 06/02/2008

LR 12.4.8

handbook-rule
LR 12.4.7 R does not apply if the trust deed or terms of issue of the relevant securities authorise the listed company to purchase its own equity shares.
  • 01/07/2005

LR 12.4.9

handbook-rule

A circular convening a meeting required by LR 12.4.7 R must include (in addition to the information in LR 13 (Contents of circulars)):

  1. (1) a statement of the effect on the conversion expectations of holders in terms of attributable assets and earnings, on the basis that the company exercises the authority to purchase its equity shares in full at the maximum price allowed (where the price is to be determined by reference to a future market price the calculation must be made on the basis of market prices prevailing immediately prior to the publication of the circular and that basis must be disclosed); and
  2. (2) any adjustments to the rights of the holders which the company may propose (in such a case, the information required under paragraph (1) must be restated on the revised basis).
  • 06/08/2007

Other similar transactions

LR 12.4.10

handbook-guidance
A listed company intending to enter into a transaction that would have an effect on the company similar to that of a purchase of own equity shares should consult with the FSA to discuss the application of LR 12.4.
  • 01/07/2005

LR 12.5

Purchase of own securities other than equity shares

  • 01/07/2005

LR 12.5.1

handbook-rule

Except where the purchases will consist of individual transactions made in accordance with the terms of issue of the relevant securities, where a listed company intends to purchase any of its securities convertible into its equity shares with a premium listing it must:

  1. (1) ensure that no dealings in the relevant securities are carried out by or on behalf of the company or any member of its group until the proposal has either been notified to a RIS or abandoned; and
  2. (2) notify a RIS of its decision to purchase.
  • 06/04/2010

Notification of purchases, early redemptions and cancellations

LR 12.5.2

handbook-rule
Any purchases, early redemptions or cancellations of a company's own securities convertible into equity shares with a premium listing, by or on behalf of the company or any other member of its group must be notified to a RIS when an aggregate of 10% of the initial amount of the relevant class of securities has been purchased, redeemed or cancelled, and for each 5% in aggregate of the initial amount of that class acquired thereafter.
  • 06/04/2010

LR 12.5.3

handbook-rule

The notification required by LR 12.5.2 R must be made as soon as possible and in any event no later than 7:30 a.m. on the business day following the calendar day on which the relevant threshold is reached or exceeded. The notification must state:

  1. (1) the amount of securities acquired, redeemed or cancelled since the last notification; and
  2. (2) whether or not the securities are to be cancelled and the number of that class of securities that remain outstanding.
  • 01/07/2005

LR 12.5.4

handbook-rule
Where a listed company purchases or makes an early redemption of shares other than equity shares, the notification required by LR 12.5.2 R must include the matters set out in LR 12.5.3 R and, in addition, the number of the shares purchased or redeemed early for cancellation and the number purchased to be held as treasury shares.
  • 01/07/2005

Period between purchase and notification

LR 12.5.5

handbook-rule
In circumstances where the purchase is not being made pursuant to a tender offer and the purchase causes a relevant threshold in LR 12.5.2 R to be reached or exceeded, no further purchases may be undertaken until after a notification has been made in accordance with LR 12.5.2 R to LR 12.5.4 R.
  • 01/07/2005

Convertible securities

LR 12.5.6

handbook-rule
In the case of securities which are convertible into, exchangeable for, or carry a right to subscribe for equity shares, unless a tender offer is made to all holders of the class, purchases must not be made at a price higher than 5% above the average of the market values for the securities for the five business days immediately prior to the date of purchase.
  • 01/07/2005

Warrants and options

LR 12.5.7

handbook-rule

Where, within a period of 12 months, a listed company purchases warrants or options over its own equity shares which, on exercise, convey the entitlement to equity shares representing 15% or more of the company's existing issued shares (excluding treasury shares), the company must send to its shareholders a circular containing the following information:

  1. (1) a statement of the directors' intentions regarding future purchases of the company's warrants and options;
  2. (2) the number and terms of the warrants or options acquired and to be acquired and the method of acquisition;
  3. (3) where warrants or options have been, or are to be, acquired from specific parties, a statement of the names of those parties and all material terms of the acquisition; and
  4. (4) details of the prices to be paid.
  • 01/07/2005

LR 12.6

Treasury shares

  • 01/07/2005

Prohibition on sales or transfers of treasury shares

LR 12.6.1

handbook-rule
Subject to LR 12.6.2 R, sales for cash, or transfers for the purposes of, or pursuant to, an employees' share scheme, of treasury shares must not be made during a prohibited period.
  • 01/07/2005

Exemptions

LR 12.6.2

handbook-rule

LR 12.6.1 R does not apply to the following sales or transfers by a listed company of treasury shares:

  1. (1) transfers of treasury shares in connection with the operation of an employees' share scheme where the transfer facilitates dealings that do not fall within the provisions of the Model Code; or
  2. (2) sales or transfers by the company of treasury shares (other than equity shares) of a class whose price or value would not be likely to be significantly affected by the publication of the information giving rise to the prohibited period.
  • 06/08/2007

Notification of capitalisation issues and of sales, transfers and cancellations of treasury shares

LR 12.6.3

handbook-rule

If by virtue of its holding treasury shares, a listed company is allotted shares as part of a capitalisation issue, the company must notify a RIS as soon as possible and in any event by no later than 7:30 a.m. on the business day following the calendar day on which allotment occurred of the following information:

  1. (1) the date of the allotment;
  2. (2) the number of shares allotted;
  3. (3) a statement as to what number of shares allotted have been cancelled and what number is being held as treasury shares; and
  4. (4) where shares allotted are being held as treasury shares, a statement of:
    1. (a) the total number of treasury shares of each class held by the company following the allotment; and
    2. (b) the number of shares of each class that the company has in issue less the total number of treasury shares of each class held by the company following the allotment.
  • 01/07/2005

LR 12.6.4

handbook-rule

Any sale for cash, transfer for the purposes of or pursuant to an employees' share scheme or cancellation of treasury shares by a listed company must be notified to a RIS as soon as possible and in any event by no later than 7:30 a.m. on the business day following the calendar day on which the sale, transfer or cancellation occurred. The notification must include:

  1. (1) the date of the sale, transfer or cancellation;
  2. (2) the number of shares sold, transferred or cancelled;
  3. (3) the sale or transfer price for each of the highest and lowest prices paid, where relevant; and
  4. (4) a statement of:
    1. (a) the total number of treasury shares of each class held by the company following the sale, transfer or cancellation; and
    2. (b) the number of shares of each class that the company has in issue less the total number of treasury shares of each class held by the company following the sale, transfer or cancellation.
  • 01/07/2005