Listing Rules class tests—fundamentals
Listing Rules class tests—fundamentals

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

  • Listing Rules class tests—fundamentals
  • What are the class tests used for?
  • What are the different class tests?
  • The class tests and substantial transactions under Chapter 10 of the Listing Rules
  • The class tests and related party transactions under Chapter 11 of the Listing Rules
  • The class tests and reverse takeovers under Chapter 5 of the Listing Rules
  • What is a class 2 transaction?
  • What is a class 1 transaction?
  • What is a reverse takeover?
  • The class tests and shell companies
  • More...

Listing Rules class tests—fundamentals

This document provides accessible practical guidance and links to more comprehensive content in relation to the class tests used to classify a transaction by a listed company under the Listing Rules.

What are the class tests used for?

The class tests (also referred to as percentage ratios) are a series of tests used to classify the size and importance of a transaction undertaken by a listed company or its subsidiary undertakings. The results of the class tests determine how significant the transaction is and what action in relation to the transaction, if any, the listed company needs to take. These rules are primarily aimed at ensuring that shareholders are kept fully informed and, in some cases, have the opportunity to vote on transactions which may affect their investment in the company. The class tests are set out in LR 10 Annex 1 of the Listing Rules and are used to assess three categories of transactions:

  1. substantial transactions under Chapter 10 of the Listing Rules

  2. transactions with related parties under Chapter 11 of the Listing Rules, and

  3. reverse takeovers under Chapter 5 of the Listing Rules

What are the different class tests?

There are four class tests in the Listing Rules and these are:

  1. the assets test

  2. the profits test

  3. the gross capital test

  4. the consideration test

The first three of these class tests compare the gross

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