Class 1 transactions—fundamentals
Class 1 transactions—fundamentals

The following Corporate guidance note provides comprehensive and up to date legal information covering:

  • Class 1 transactions—fundamentals
  • What is a class 1 transaction?
  • What are the class tests?
  • Which transactions should be classified under the class tests?
  • Are there any modifications to the class tests for certain transaction types?
  • When is the grant of an indemnity treated as a class 1 transaction?
  • When is a break fee arrangement treated as a class 1 transaction?
  • When is an issue of equity shares by a major subsidiary treated as a class 1 transaction?
  • How is an option agreement treated under the class test rules?
  • How is a joint venture treated under the class test rules?
  • more

This document provides accessible practical guidance and links to more comprehensive content in relation to class 1 transactions undertaken by UK companies with a premium listing. It focuses on the main company law and regulatory issues found in the Companies Act 2006 (CA 2006) and the FCA Handbook.

The Listing Rules in the FCA Handbook contain detailed rules on the action a premium listed company must take when it enters into a transaction which is deemed to be significant due to its size or impact on the listed company. These are aimed at ensuring that shareholders are kept fully informed and have the opportunity to vote on significant transactions which may affect their investment in the company. The rules relating to transactions by premium listed companies are set out in Chapter 10 of the Listing Rules and are part of the UK’s super equivalent rules over and above the EU minimum requirements for all listed companies. They only apply to companies with a premium listing and not to those with a standard listing.

What is a class 1 transaction?

In summary, a class 1 transaction is a transaction (or a series of related transactions in a 12 month period) by a premium listed company or one of its subsidiary undertakings which accounts for 25% or more of the size of the