PLUS

1. Introduction

PLUS has today, 8 February 2010, launched a market consultation in relation to proposed changes to the PLUS Rules for Issuers ("Rules") and the regulatory framework for admitting issuers of securities to the PLUS-quoted market. A clean copy of the revised PLUS Rules for Issuers is available for inspection here. For a marked up copy showing the proposed changes please click here.

PLUS market users and other interested parties are invited to comment on the detailed proposals by 8 March 2010.  

The proposed Rules incorporate the new fast-track admission procedure for applicants from Qualifying Markets implemented by means of the release of a Market Notice on 12 January 2010.  Issuers may also obtain admission to the PLUS-quoted market conditional on PLUS approving an application on the basis of a published admission document or prospectus. Whilst fast-track applicants from Qualifying Markets will not be required to publish a PLUS admission document to obtain admission, PLUS proposes that all other issuers of securities applying for admission will be obliged to publish a PLUS admission document or prospectus. At the same time, PLUS is able to offer a streamlined application process with respect to non-fast track issuers.  Another theme of the new Rules is to clarify and amplify the responsibilities and role of a PLUS Corporate Adviser, which is required to be appointed by all issuers for the purposes of admission and retained at all times whilst the securities of the issuer are traded on PLUS.  Certain other changes to the Rules have been made for clarification purposes.  The more substantial changes are as follows:  

• Rule 3 has been amended with respect to the requirement that a sufficient number of  securities are in public hands to maintain an orderly market on admission. In determining whether sufficient free float exists, revised guidance has been provided, to the effect that PLUS will look to a reasonable expectation of appropriate liquidity in determining compliance with the free float requirement.  
• The Lock-In Requirement at Rule 4 with respect to new enterprises has been amended to explicitly include fast-track applicants admitted to trading on a Qualifying Market for a period of less than 18 months.  
• Rule 6 propounds that non-fast track issuers must publish a PLUS admission document or prospectus on, or before admission to PLUS.
• Rule 7 clarifies that fast-track applicants are not required to publish a PLUS admission document.  
• Rules 15 to 19 set out the application procedure for issuers other than fast-track applicants from Qualifying Markets.  PLUS has reserved the right in Guidance Note 16.1 to engage suitably qualified practitioners with respect to applications of a complex nature requiring specialist expertise, sector or regional specific knowledge. This facility replaces the existing PLUS Panel, which PLUS proposes to disband from the implementation of the new Rules.
• The existing requirement to announce a commencement of dealings announcement on admission providing the information required by the present Appendix 3 of the 2009 PLUS Rules is removed in the new Rules, but the Guidance Notes to Rule 18 clarify that the issuer will need to announce on admission the outcome of any fundraising or issue of securities subsequent to the publication of the issuer’s admission document or prospectus, or alternatively publish a supplementary admission document.  
• Rules 20 to 28 enshrine the new fast-track admission procedure. Admission of a fast-track applicant from a Qualifying Market is not conditional on the approval of PLUS but PLUS reserves the right to refuse admission when, inter alia,  the fast-track applicant’s regulatory announcements and annual accounts suggest an actual or imminent shortfall in the fast-track applicant’s working capital and there is no convincing or feasible plan to address the shortfall. PLUS will also refuse admission if the admission of the fast-track applicant is likely to impair the reputation and integrity of the PLUS market or the interests of investors. 
• Rule 32 clarifies that an issuer is required to provide its PLUS Corporate Adviser with such information as a PLUS Corporate Adviser may reasonably require in the discharge of its regulatory responsibilities.  
• Rule 34 makes explicit that a PLUS Corporate Adviser must ensure, so far as is reasonably practicable, that the issuer and its securities continue to remain suitable to be traded on the PLUS market post admission.  
• Rules 34 also clarifies that it is a PLUS Corporate Adviser’s responsibility to liaise with an issuer to ensure that the issuer is able to meet its financial reporting timetable and announce financial results as they fall due.  
• Rule 47 sets out the financial reporting timetable for issuers on PLUS. Issuers must announce their interim results as soon as possible and in any event no later than 3 months after the end of the relevant period, and their final results as soon as possible but in any event no later than 5 months after the end of the financial period. Rule 48 mandates the suspension of trading if issuers fail to announce financial results in accordance with the timetable, and the present practice of affording issuers an additional one month before a suspension is brought about will be dispensed with.  An issuer will now be required to include a balance sheet in its announced interim results together with comparatives for the previous corresponding period – see Appendix 4.
• Rule 54 mandates that an investment vehicle which has not made a material investment after the period of one year following admission must either seek shareholders’ approval in respect of each subsequent year for the further pursuit of its investment strategy or return its cash to shareholders. Such approval must be sought in each subsequent year if it has not made by then a material investment.  
• The obligation on issuers in Rule 57 of the present Rules for Issuers to publish a further admission document in relation to further offers of securities in certain circumstances will be dispensed with in the new Rules.  
• Rule 75 has been updated to make explicit the existing practice that PLUS may require an issuer to announce a second set of interim results if a change in its accounting reference date prolongs its current accounting reference period.  
• Rule 78 reserves discretion to PLUS to suspend trading when an issuer admitted as a fast- track applicant has been suspended on its Qualifying Market for breach of the rules of that market. Rule 80 enables PLUS to withdraw such securities forthwith if they have been withdrawn from the Qualifying Market for a breach of the rules of that market.  
• Whilst preserving the present withdrawal requirements and procedure for issuers wishing to initiate a withdrawal from PLUS, PLUS proposes to mandate the issuer to send a copy of the announcement of its intention to withdraw from PLUS in the post to its shareholders to ensure that they are put on notice of the intention to withdraw.  
• The Guidance Note on Paragraph 34 of Appendix 1 clarifies that a working capital report is not required to be submitted as part of the application documentation, but that PLUS may require a particular issuer to justify the working capital statement required by Paragraph 34 of Appendix 1 and demonstrate that there is a reasonable basis for making such a statement.  
• Appendix 2 Part 1 lays out a streamlined list of items, documents and confirmations required to be provided to PLUS by an issuer other than a fast-track applicant.  Specific confirmation is required from the PLUS Corporate Adviser that the issuer and its securities meet the eligibility criteria and are otherwise suitable for admission to PLUS. A company profile to be uploaded onto PLUS’ website on admission in addition to the profile set out in the issuer’s application announcement will no longer be required.  
• The application announcement required by Appendix 2 Part 1 of an issuer other than a fast- track applicant has been expanded to include additional information not required at present.  

2. Questions for consultation

The views of consultation participants are welcome on any aspect of the revisions to the PLUS Rules for Issuers but in particular the following:  

2.1. Fast-track applicants from Qualifying Markets are required, as a condition of admission, to maintain a website where, inter alia, its most recent audited accounts and its historic admission or listing document are available for inspection.  

Q. 1 Should PLUS introduce a general requirement for all PLUS issuers to maintain a website where its audit reports, circulars, and admission document or prospectus are available as an alternative to maintaining these items on PLUS’s website? 

2.2. PLUS proposes to amend the withdrawal requirements to ensure that shareholders are put on notice of an issuer’s intention to withdraw. Under the present Rules, where, after the period of 10 business days, legitimate objections have been raised to a proposed withdrawal, such withdrawal must be made conditional on the consent of 75% of votes cast by its shareholders at a general meeting.  

Q. 2 Should PLUS mandate all issuers to proceed and call a general meeting and seek the consent of shareholders to withdraw from PLUS and dispense with the 10 business day period for objections to be made?  

2.3  PLUS will usually require existing shareholders’ right of pre-emption and the provisions for dis- applying such pre-emption rights to be comparable to those for a UK public limited company.  

Q. 3 Should PLUS make such pre-emption rights an eligibility criterion under Rule 3? 

2.4 Fast-track issuers and non fast-track issuers are obliged to submit an application announcement to PLUS at least ten business days prior to the intended admission date.  

Q. 4 Should non fast-track issuers be required to publish their admission document or prospectus (or pathfinder) on PLUS’ website ten business days prior to the intended admission date as an alternative to the application announcement?  

2.5 It is desirable for issuers to benefit from an appropriate level of trading activity in the aftermarket and visibility for investors.  

Q. 5 Do you believe that PLUS ought to introduce a requirement at some stage in the future for issuers to appoint a corporate broker? If so, how do you believe that this should be implemented and what regulatory framework is appropriate?  

Responses to consultation

PLUS Markets Group plc
Standon House
21 Mansell Street
London E1 8AA

Telephone: 020 7553 2035

E-Mail: regulation@plusmarketsgroup.com

 If you wish your comments to remain confidential, please indicate this in your response

• PLUS Rules for Issuers (clean)-consultation draft 08 02 10 
• PLUS Rules for Issuers (mark-up))-consultation draft 08 02 10