An issuer must, in relation to a reverse takeover:
comply with the requirements of UKLR 7.3 other than UKLR 7.3.2R for the reverse takeover;
send a reverse takeover circular to its shareholders and obtain their prior approval in a general meeting for the reverse takeover; and
ensure that any agreement effecting the reverse takeover is conditional on that approval being obtained.
UKLR 10 sets out requirements for the content and approval of reverse takeover circulars.
If, after obtaining shareholder approval but before the completion of a reverse takeover, there is a material change to the terms of the transaction, the listed company must comply again separately with UKLR 7.5.1R in relation to the transaction.
The FCA would (among other things) generally consider an increase of 10% or more in the consideration payable to be a material change to the terms of the transaction.
If a listed company becomes aware of a matter described in (2) after the publication of a reverse takeover circular, but before the date of a general meeting, it must, as soon as practicable:
advise the FCA of the matters of which it has become aware; and
send a supplementary circular to holders of its listed equity shares, providing an explanation of the matters referred to in (2).
The matters referred to in (1) are:
a material change affecting any matter the listed company is required to have disclosed in a reverse takeover circular; or
a material new matter which the listed company would have been required to disclose in the reverse takeover circular if it had arisen at the time of its publication.
The listed company must have regard to UKLR 10.3.1R(3) when considering the materiality of any change or new matter under UKLR 7.5.5R(2).
UKLR 10 applies in relation to a supplementary circular. It may be necessary to adjourn a convened shareholder meeting if a supplementary circular cannot be sent to holders of listed equity shares at least 7 days prior to the convened shareholder meeting as required by UKLR 10.1.9R.
If an issuer is proposing to enter into a transaction classified as a reverse takeover, it should consider UKLR 21.2.2G and UKLR 21.2.5G.
Where an issuer completes a reverse takeover, the FCA will seek to cancel the listing of an issuer’s equity shares unless the FCA is satisfied that circumstances exist such that cancellation is not required. The FCA will have regard to UKLR 21.2.1R and the individual circumstances of the case.
A sponsor must contact the FCA on behalf of an issuer as early as possible:
before a reverse takeover which has been agreed or is in contemplation is announced; or
where details of the reverse takeover have leaked,
to discuss whether a cancellation of the issuer’s listing is appropriate on completion of the reverse takeover.
UKLR 7.5.12G to UKLR 7.5.15G set out circumstances in which the FCA will generally be satisfied that a cancellation is not required.
Where:
those shares are also listed in the equity shares (commercial companies) category; and
the issuer wishes to maintain its listing of shares in the equity shares (commercial companies) category,
the FCA will generally be satisfied that a cancellation is not required on completion of a reverse takeover.
Where an issuer acquires the shares of a target with a different listing category from its own and the issuer wishes to maintain its listing in the equity shares (commercial companies) category, the FCA will generally be satisfied that a cancellation is not required on completion of a reverse takeover if:
the issuer will continue to be eligible for the equity shares (commercial companies) category following completion of the transaction;
a sponsor provides an eligibility letter to the FCA setting out how the issuer as enlarged by the acquisition satisfies each listing rule requirement that is relevant to it being eligible for the equity shares (commercial companies) category not less than 20 business days prior to the announcement of the reverse takeover; and
the issuer makes an announcement or publishes a circular explaining:
the background and reasons for the acquisition;
any changes to the acquiring issuer’s business that have been made or are proposed to be made in connection with the acquisition;
the effect of the transaction on the acquiring issuer’s obligations under the listing rules;
how the acquiring issuer will continue to meet the relevant requirements for listing; and
any other matter that the FCA may reasonably require.
The FCA will generally be satisfied that a cancellation is not required on completion of a reverse takeover if:
the target is listed with a different listing category from that of the issuer;
the issuer wishes to transfer its listing to a different listing category in conjunction with the acquisition; and
the issuer as enlarged by the relevant acquisition complies with the relevant requirements of UKLR 21.5 to transfer to a different listing category.
Where an issuer is applying UKLR 21.5 in order to avoid a cancellation as contemplated by UKLR 7.5.14G, the FCA will normally waive the requirement for shareholder approval under UKLR 21.5.6R(3) where the issuer is obtaining separate shareholder approval for the acquisition.
