Listing Rules and Guidance: Contents


 
 

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LD10-1

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Listing Decisions Series 10-1 — Release by Company A of a standard announcement pursuant to paragraph 39.2 of Listing Agreement [now Rule 13.10] while contemplating share placing (January 2000) (Updated for rule reference in September 2009 )

Summary
Name of Party Company A — a listed company
Subject Release by Company A of a standard announcement pursuant to paragraph 39.2 of Listing Agreement [now Rule 13.10] while contemplating share placing
Listing Rules Paragraph 39.2 of Listing Agreement [now Rule 13.10] and Paragraph 5 of Practice Note 11
Decision Company A's application for listing of placing shares not approved

Summary of Facts

On Day 1, the price and trading volume of Company A's shares started to increase. Such increase continued until Day 7. On Day 4, the increase in the share price intensified and the Exchange contacted a director of Company A enquiring into the reasons for such increase. The Exchange was advised by Company A that there was no information that ought to be released pursuant to paragraph 2 or paragraph 3 of the Listing Agreement [now Rule 13.09 or Rule 13.23]. Accordingly a standard announcement pursuant to paragraph 39.2 of the Listing Agreement [now Rule 13.10] was released on the Exchange's teletext system on Day 5.

After trading hours on Day 6, the Exchange was informed by a financial adviser on behalf of Company A that Company A had concluded a placing agreement for the issue of new shares in Company A.

Analysis

Upon enquiry, Company A admitted that it had on Day 2 appointed a consultant to identify on a "no name" basis a suitable brokerage firm which would be interested in arranging a share placing for Company A. The instructions to the consultant were still open on Day 4 and Day 5 when Company A released its standard paragraph 39.2 [now Rule 13.10] announcement.

Company A reiterated that it was not aware of the reasons for the increase in the price and trading volume of Company A's shares during the period from Day 1 to Day 6. Company A considered that the issue of the standard paragraph 39.2 [now Rule 13.10] announcement was appropriate on Day 4 and Day 5 as Company A had not commenced any negotiations for a placing with any agent on or before Day 4 and a premature announcement at that stage might have led to unnecessary speculation in Company A's shares.

It appeared, however, that Company A or its advisers had permitted price-sensitive information regarding the proposed issue of new securities to leak out onto the market prior to its proper publication and certain people had acted upon this information and traded in Company A's shares.

Decision

Pursuant to paragraph 5 of Practice Note 11, the Exchange decided not to approve Company A's application for the listing of the placing shares.