LPC

Study Unit Specifications (Elective Subject)

Code: UJXTT3-10-M

Title: Corporate Finance (Equity)

Version: 2

Level: M-level

UWE credit rating: 10

ECTS credit rating: 5 Module Type: Non-MAR

Owning Faculty: Social Sciences and Humanities

Field: n/a Field Leader: n/a

Valid From: September 2008 Discontinued from:

Contributes towards: Postgraduate Diploma in Legal Practice

Pre-requisites: none

Co-requisites: none

Excluded combinations: none

1. Rationale:

As with all study units on the programme, the rationale is to prepare the student for the first day of work as a professional lawyer (i.e. as a new trainee solicitor in a firm of solicitors). Specifically in this case, the rationale is to prepare the student for work in a large firm of ‘city’ solicitors.

2. Learning outcomes:

On completion of the study unit students are expected to be able to (at a professional level):

2.1 understand and critically evaluate the different ways of raising equity finance and the commercial purpose behind any given equity finance exercise;

2.2 appreciate the commercial and legal criteria that underlie an equity financing transaction and influence the structure of the transaction;

2.3 understand and critically analyse and evaluate the law and regulatory regimes that form the foundation of a city commercial legal practice dealing with mainstream corporate finance transactions;

2.4 appreciate and understand the ‘tiers’ of overlapping regulation that may apply to any given corporate finance transaction (including the legal and regulatory constraints on directors of public companies engaged in such transactions);

2.5 appreciate how different transactions are carried out in practice;

2.6 recognise the responsibilities of the advisors in the different transactions including the legal advisors and the role of a trainee solicitor in a team of legal advisors; and

2.7 use research and enquiry techniques to access, interpret, critically analyse and apply relevant knowledge.

3. Syllabus outline:

The study unit introduces the student to the main types of equity financing transactions and the factors which influence the choice of equity transaction. The study unit identifies and explains the role of the professional advisors in equity raising transactions and how such transactions are carried into effect in practice. In particular, the students will consider:

3.1 An overview of corporate finance regulation. The FSA, the FSA’s Listing, Prospectus and Disclosure and Transparency Rules, the London Stock Exchange, the Investment Protection Committees (IPCs), the Takeover Panel, the Investment Banks & Sponsors, underwriting. Raising equity finance in London and a typical corporate finance transaction.

3.2 The additional legal and regulatory framework applicable to public limited companies (for example, unlawful financial assistance). A review of group corporate structures: subsidiaries & subsidiary undertakings, divisions, parent & holding companies and sister companies. The plc AGM.

3.3 The additional legal and regulatory framework applicable to directors and major shareholders of public limited companies. Statutory requirements, the Model Code, insider dealing and market abuse.

3.4 Raising equity finance through the issue of securities. The regulation to be considered on a corporate finance transaction. The methods of raising finance in outline with reference to both initial and subsequent offerings. Subsequent offerings in detail: rights issues, open offers, placings. The impact of the Companies Acts 1985 and 2006, the FSA’s rules, the FSMAct and the IPC guidelines. Liability for false statements. An example timetable for a rights issue. The role of the corporate finance lawyer: agreeing the timetable, verification, drafting and commenting on parts of the prospectus, understanding the underwriting arrangements and fees and understanding the roles of the other advisers. Consideration of particular aspects of a real prospectus (e.g. the Chairman’s letter, the additional information and the Notice of GM) with reference to the Prospectus Rules.

3.5 Acquisitions and equity finance raising. Transactions by public limited companies and the impact of chapter 10 of the Listing Rules with particular references to the class tests and the requirements for a class 1 transaction. The overlap with other regulation where shares are being issued to fund the consideration (i.e. the combined prospectus and class 1 circular). The impact of the IPCs. Vendor placings with and without clawback. A model timetable for completion of an acquisition with a vendor placing. A detailed consideration of particular statements to be made in the class 1 circular. Consideration of particular aspects of a real class1/prospectus.

3.6 Takeovers. The Takeover Code, SARs and the Panel. Voluntary and mandatory bids. Recommended and hostile bids. Timetable and documentation. Stakebuilding. Failed bids and procedures to acquire shares of dissenting minorities. Schemes of Arrangement

3.7 Tax in the city context. Taxation of corporate clients. Tax consequences of different types of finance raising schemes.

4. Teaching & learning methods:

      - case studies and other practical factual scenarios: e.g. Class 1 Circular/Prospectus

      - individual and group work to identify relevant legal, practical, taxation and commercial issues arising from factual scenarios / transactions

      - individual and group presentations

      - preparation of e-mails and memos to (notional) ‘colleagues’ within an office environment

      - writing letters of advice to (notional) clients

      - drafting (or amending) relevant transactional documentation: e.g. company law documentation (resolutions) and extracts from circulars

      - individual and group review of current financial newspapers to track relevant corporate finance and takeover activity

5. Indicative sources:

    - relevant LPC manual: CLP: Public Companier & Equity Finance

    - relevant statutory sources: Companies Acts 1985 and 2006, FSMA 2000

    - relevant regulatory sources: FSA’s Handbook and relevant codes, City Code on Takeovers & Mergers

6. Assessment Infrastructure:

One 3-hour unseen, open book examination (with an additional 30 minutes of reading time).

The examination constitutes 100% of the marks for the study unit. The pass mark is 50%.

Second and final attempts: Re-assessment is by the same method as detailed above. See Assessment Regulations for further details.

Specification confirmed by .............................................. Date .........February 2004

(Associate Dean, Faculty of Law)

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