Although there are different requirements for a company wishing to float on each of the London Stock Exchange, AIM or the ICAP Securities and Derivatives Exchange (ISDX), the process to prepare the company is essentially the same.
The process will be costly and time consuming for management. You should also become familiar with the increased regulatory burden on the company and its directors not only when applying to float, but also to comply with the company’s continuing obligations once floated.
Your advisers will be able to discuss with you the suitability of your company for flotation and the likelihood of the success of any associated fundraising. They will also be able to advise you on the best market for your company based on its sector, history and business strategy.
Once decisions have been made on where to float and the structure of the flotation (for example, whether it will include fundraising by means of a public offer or a placing of shares) the work will begin to ensure the company is prepared.
Following appointment of all necessary advisors, such as a sponsor/nomad/corporate advisor (depending on the exchange), financial advisor, registrar and lawyers, due diligence will begin. While the accountants carry out due diligence on the company’s financials and prepare reports and projections for inclusion in the prospectus or admission document, we will investigate the legal aspects. We will:
Consider the type and constitution of the company – if a private company registered in the UK, the company will need to be re-registered as a public company with appropriate articles permitting the shares in the company to be freely transferable and available for electronic settlement;
Consider the management of the company – if any changes are necessary to the structure of the board, they will appoint and/or remove directors and put in place appropriate service contracts, together with constituting relevant committees, such as a remuneration committee;
Assist with the drafting of the prospectus/admission document (the document that is required to be published which gives full details of a company and its shares – this is drafted using the information gleaned from the due diligence process) and verify the accuracy of each of the statements made;
Ensure that all contracts, assets and intellectual property rights are fully owned by the business and will not be affected by the flotation; and
Consider whether employee share schemes would be appropriate to incentivise staff and make sure any pension schemes and insurance are fit for purpose.
advice as to the best way forward. As each company and its business is different, some or all of the actions described here may be necessary. There will also be further considerations depending on the company’s sector; for example scientific research based companies and mining companies are required to comply with more stringent regulations than other companies.
We can also put you in touch with advisors who will be able to help you through the non-legal aspects of bringing your company to market.