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CHANGES TO THE OFEX RULES
With effect from 15 December 2003, the Rules of the OFEX
market were amended. The most interesting changes were as
follows:
1.1 Corporate Governance and independence of sole non-executive
directors.
Where an OFEX company has only one non-executive director,
the Rules of the OFEX market have been changed to require
the non-executive director to be truly independent. Provision
A.3.1 of the Combined Code on Corporate Governance sets out
a list of criteria for determining a director's independence.
This list sets out relationships or circumstances which may
appear to be relevant to the determination of independence,
including if the director:
| · |
Has been an employee of the company or the
group within the last 5 years; |
| · |
Has or has had, a material business relationship
with the company either directly, or as a partner, shareholder,
director or senior employee of a body that has such a
relationship with the company, within the last 3 years; |
| · |
Has close family ties with any of the company's
advisers, directors or senior employees; |
| · |
Has received or receives additional remuneration
from the company apart from a director's fee, participates
in the company's share option or a performance-related
pay scheme, or is a member of the company's pension scheme; |
| · |
Represents a significant shareholder; |
| · |
Holds cross-directorships or has significant
links with other directors through involvement in other
companies or bodies; |
| · |
Has served on the board for more than 9
years from the date of their first election. |
These considerations will now be particularly important when
an OFEX Company is considering the appointment of a sole non-executive
director.
1.2 Investor Relations
When a new applicant is applying for its shares to be traded
on the OFEX market for the first time, it is now required
to provide contact details for the person who will be responsible
for Investor Relations. This is one of the documents which
needs to be provided to the applications manager at least
15 business days in advance of the date upon which the trading
is expected to commence. Whilst there is no obligation to
update this as it does not fall within the scope of the Company
Profile which the company is obliged to update, OFEX have
indicated that they expect that companies will want to keep
this updated.
1.3 Payment of fees to corporate advisers
A new rule has been introduced to require a corporate adviser
to notify the OFEX Board if any of the issuers for which it
acts do not pay any agreed fees for its services in a timely
fashion. This information would not be made public but would
mean that the OFEX Board could ask the Company to provide
information about its financial status if it felt that it
was an early indicator of financial difficulties at the Company.
This means that if a company becomes insolvent and the corporate
adviser had not notified OFEX, in accordance with this rule,
it may mean that the corporate adviser will be subject to
disciplinary proceedings.
If
you require further information on any matter covered in this
note, please contact your principal contact at Charles Russell
or Simon
Gilbert, Katy
Knight, Clive
Hopewell or Alexander
Keepin (London), Francis
Rundall or Richard
Norton (Cheltenham) or Geoff
Sparks (Guildford) and on 0207 203 5000.
Please note that the summaries above are a general indicative
guide only. They are not exhaustive. This information has
been prepared by the firm as a service to our clients. As
it is a general guide, we recommend that you seek professional
advice before taking action. No liability can be accepted
by the firm for any action taken or not taken as a result
of this information. The firm is not authorised under the
Financial Services and Markets Act 2000 but we are able in
certain circumstances to offer a limited range of investment
services to clients because we are members of the Law Society.
We can provide these investment services if they are an incidental
part of the professional services we have been engaged to
provide.
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