(1) any voting rights which such a person exercises (or controls the exercise of) independently in its capacity as bare trustee, investment manager, collective investment undertaking or a long-term insurer in respect of its linked long-term business if no associate of that person interferes by giving direct or indirect instructions, or in any other way, in the exercise of such voting rights (except to the extent any such person confers or collaborates with such an associate which also acts in its capacity as investment manager, collective investment undertaking or long-term insurer); or
(2) any voting rights which a person may hold (or control the exercise of) solely in relation to the direct performance, by way of business, of:
(a) underwriting the issue or sale of securities; or
(iii) the voting rights are not exercised within the period the securities are held; and
(iv) no attempt is made directly or indirectly by the firm to intervene in (or attempt to intervene in) or exert (or attempt to exert) influence on the management of the issuer within the period the securities are held.
(2) an arrangement (other than an arrangement in the ordinary course of business)6 pursuant to which a listed company and a related party each invests in, or provides finance to, another undertaking or asset; or
(3) any other similar transaction or arrangement (other than a transaction 6in the ordinary course of business) between a listed company and any other person the purpose and effect of which is to benefit a related party.
4In assessing whether a transaction is in the ordinary course of business under this chapter, the FCA will have regard to the size and incidence of the transaction and also whether the terms and conditions of the transaction are unusual.
6If, after obtaining shareholder approval but before the completion of a related party transaction, there is a material change to the terms of the transaction, the listed company must comply again separately with LR 11.1.7 R in relation to the transaction.
6The FCA would (amongst other things) generally consider an increase of 10% or more in the consideration payable to be a material change to the terms of the transaction.
If a meeting of the listed company has been called to approve a transaction or arrangement and, after the date of the notice of meeting but before the meeting itself, a party to that transaction or arrangement has become a related party, then to comply with LR 11.1.7 R the listed company should:
(1) ensure that the related party concerned does not vote on the relevant resolution and that the related party takes all reasonable steps to ensure that its associates do not vote on the relevant resolution; and
(2) send a further circular, for receipt by shareholders at least one clear business day before the last time for lodging proxies for the meeting, containing any information required by LR 13.3 (Contents of all circulars) and LR 13.6 (Related party circulars) that was not contained in the original circular with the notice of meeting.
(b) 3before entering into the transaction or arrangement, obtain3 written confirmation from8 a sponsor8 that the terms of the proposed transaction or arrangement with the related party are fair and reasonable as far as the shareholders of the listed company are concerned; and
(c) 3as soon as possible upon entering into the transaction or arrangement, make an RIS announcement which sets out:3
Note: LR 13.6.1R (8) requires details of each of the transactions or arrangements being aggregated to be included in the circular.
(3) If transactions or arrangements that are small transactions under LR 11 Annex 1 paragraph 1 are aggregated under paragraph (1) of this rule and for the aggregated small transactions each of the percentage ratios is less than 5%, but one or more of the percentage ratios exceeds 0.25%, the listed company must comply with: