What salient terms to disclose?

Equity capital markets (ECM)

When a public listed company or its subsidiary enters into a contract in respect of a transaction which requires the approval of the shareholders of the PLC, the circular must include salient terms of the contract.

Some considerations in determining which terms of the contract to be disclosed as salient terms in the circular include:

1. Whether disclosure of the terms is required under the Listing Requirements.

e.g. for an acquisition or disposal which meets the threshold, the Listing Requirements require the circular to set out the date, parties, general nature, consideration and mode of consideration of material contracts outside ordinary course of business entered into by the following within 2 years immediately preceding the date of the circular:

• the corporation to be acquired or disposed of; and

• the corporation whose shares or convertible securities are to be issued as consideration for the disposal by the PLC.

2. Whether the shareholders/ investors ought to know the terms to make an informed decision on whether to approve the transaction.

3. Whether the terms are unusual or onerous for a transaction of the same nature.

4. Whether the terms have financial impact on the PLC or the relevant subsidiary.

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This post was first posted on Linkedin on 4 March 2021.

Image by mohamed Hassan from Pixabay

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