Q&As

What are the considerations when taking security from a listed company?

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Published on LexisPSL on 16/12/2020

The following Banking & Finance Q&A provides comprehensive and up to date legal information covering:

  • What are the considerations when taking security from a listed company?
  • Can a listed company or AIM company grant security and guarantees?
  • Are there any additional considerations when taking security or guarantees from a listed company or an AIM company?
  • Articles of association
  • Commercial benefit
  • Shareholder resolutions and notifications—AIM companies
  • Shareholder resolutions and announcements—listed companies
  • Financial assistance

What are the considerations when taking security from a listed company?

Can a listed company or AIM company grant security and guarantees?

The considerations when taking security from a listed company, ie a company admitted to trading on the Main Market of the London Stock Exchange, or an AIM company, ie a company admitted to trading on AIM are for the most part the same as for any other limited company. Provided the articles of association do not otherwise prevent it, and any necessary steps in terms of resolutions and notifications are adhered to (see below) listed companies and AIM companies are able to provide security and guarantees.

For general information about taking security, see: Taking security—overview.

Are there any additional considerations when taking security or guarantees from a listed company or an AIM company?

Articles of association

As with all companies, the articles of association should be reviewed to ensure there are no borrowing or guarantee limits or other restrictions that would be breached by the proposed transactions, or specific requirements (such as passing a shareholder resolution).

For information on articles of association, see: A company's constitution—overview.

Commercial benefit

It is common to seek a shareholder resolution when a limited company grants a guarantee in order to address any potential commercial benefit concerns, although it is not normally specified as necessary in the articles nor is it specifically required by law. Just

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