Corporate Blog: Closure of GXG markets


GXG Markets A/S has announced the surrender of its Danish Market Operator licence.

As a result, GXG’s operation of the GXG Official List, Regulated Market and GXG Main Quote and GXG First Quote multi-lateral trading facilities will cease at 1700 CET on 18 August 2015.

This announcement is the culmination of an on-going investigation into GXG by the Danish Supervisory Authority (the “FSA”) which commenced with the company’s annual inspection in November 2014.

The FSA’s enquiries identified a series of problems at GXG, including the identification of more than 70 cases where GXG had potentially breached its own rules on the admission of issuers.  The FSA found that “GXG gravely disregarded risk information” and that GXG had been “grossly negligent” in allowing so many cases to proceed without correct supervision, noting that several of the cases may have led to investors or others suffering loses as a result of fraudulent behaviour.

The FSA’s inspection revealed that GXG had repeatedly and seriously neglected and violated its own rules and internal guidelines and, as a consequence, had exposed itself and the market to precisely those elements of risk which those same rules were intended to manage and reduce.

It is against this background that the FSA’s assessment was that GXG had not operated its regulated market and its multilateral trading facilities in a safe and appropriate manner and that such conduct was incompatible with GXG continuing to hold its operating licence.

The FSA notified GXG of this draft decision on 29 May 2015 and on 29 June 2015 GXG announced an immediate moratorium on the admission of new companies to trade on GXGs marketplaces, citing grounds that it had “initiated dialogue with the FSA on the company’s regulatory affairs, including GXG contemplating a voluntary surrender of the company’s operating permits”.

Finally, on 6 July 2015, GXG announced that it would be surrendering its operating licence with effect from 18 August 2015.  The FSA has accepted the surrender of the operating licence.

GXG has announced that it is in discussions with a number of organisations regarding the continued trading in issuing companies’ securities with the intention that a timetable will be published no later than the 13 July 2015 on how this will be achieved.

If you would like any further information about this or related topics, please contact our Senior Associate Matthew Overton.

Corporate Blog – The Small Business, Enterprise and Employment Act 2015

The Small Business, Enterprise and Employment Act 2015 (the “Act”) received Royal Assent on 26 March 2015 and set a timetable for the staged implementation of various changes to company law. The first reform came into force on 26 May 2015, which imposed a prohibition on issuing bearer shares.

We consider some of the aspects of the Act which corporates and shareholders alike should be mindful of as these come into effect.

Abolition of bearer shares

As of 26 May 2015, a company is prohibited from issuing bearer shares, regardless of whether this is permitted under its Articles of Association. For companies that already have bearer shares in issue, the Act provides for a transitional period whereby holders of such shares have nine months to ‘surrender’ the shares to be cancelled and converted into registered shares. Companies must give several notices to shareholders of their rights to surrender. All rights attaching to bearer shares not surrendered by 26 December 2015 will automatically be suspended until the shares are surrendered, as long as this is before the end of February 2016.

Corporate directors

The Act will insert a section into the Companies Act 2006 to prohibit the appointment of corporate directors. The Secretary of State, however, reserves a general power to make certain exceptions to the prohibition, although how this discretion will be exercised remains unclear.

The Act provides for a one year transition period, after which the general position is that any corporate director of a company will cease to be a director.

Initially, the change was to be implemented in October 2015 but a recent amendment has postponed this so it is unlikely to come into force until early 2016.

Concealment of a director’s date of birth

In an effort to tackle identity fraud, from October 2015 the day of a director’s date of birth will not appear on the public register at Companies House, with only the month and year being visible. Directors will still be required to supply Companies House with their full date of birth, including the day.

The day element of a director’s date of birth will not be removed from the register if this information was registered at Companies House before this new rule comes into force.

Removal of requirement to file an annual return

What may come as welcome news for many companies is the removal of the requirement to file an annual return at Companies House from April 2016. Companies will instead be required to deliver a ‘confirmation statement’ to Companies House stating that all required information has been provided including, for example, details of any change of registered office and details of certain company registers. In other words, the statement will confirm that the company’s filings are up to date so an accurate picture of the company’s directors, members, charges and so forth can be gleaned from a review of the filings.

A confirmation statement must be submitted to Companies House in every 12 month period within 14 days from the end of the relevant ‘review period’. This is a period of 12 months which begins with the day of the company’s incorporation. Subsequent review periods commence on the day after the end of the previous review period.

If you would like any further information about this or related topics, please contact our Partner David Kinch or a member of the Corporate & Commercial team.

Edwin Coe Corporate Blog – Proposed changes to EIS and SEIS Rules

In March this year HMRC announced changes to the Enterprise Investment Scheme (EIS) and Seed EIS rules. However the changes cannot take effect until approval has been received from the European Commission under EU State Aid rules. The timing of these changes is uncertain but hoped to be in this tax year. The EU Commission could require retrospective implementation of some of the rules, particularly in relation to a total investment cap rule and first commercial sale rule so care will need to be exercised in these areas.

The new rules will:

  • require that all investments are made for the purpose of business growth and development;
  • require that all the EIS investors are independent from the company at the time of the first share issue;
  • exclude companies which have made commercial sales more than 12 years previously unless the company has received a prior EIS investment. The rule will not apply where the total investment represents more than 50% of the annual turnover averaged over the preceding five years;
  • cap the total EIS investment to £15 million although certain knowledge intensive companies may receive up to £20 million;
  • set the employee limit for knowledge intensive companies at 499, as opposed to the general limit of 249.

A further change in the rules for Seed EIS took effect from 6 April 2015 in any event, being the removal of the requirement that 70% of Seed EIS monies must be spent before EIS funds can be raised by a company.

Edwin Coe LLP is the leading EIS law firm specialising in Seed EIS and EIS fund and investment work. We regularly feature in the annual EIS Association Awards and received Highly Commended for the Best EIS Legal Adviser 2014.

If you would like any further information about this or related topics, please contact our Partner Victor Hawrych.

Autumn Statement 2014 update – loop hole closed

In December 2014 we published the following blog – click here

This information has now changed and below is an update:

Following the announcement by the Chancellor in his Autumn Statement 2014 of the government’s intention to put an end to the practice of avoiding stamp tax charges on UK company takeovers by structuring them as ‘cancellation’ schemes of arrangement, regulations closing the loophole came into force on 4 March 2015. The Companies Act 2006 (Amendment of Part 17) Regulations 2015 amends section 641 of the Companies Act 2006 to prohibit companies from reducing their share capital as part of a reduction scheme to effect a takeover. The exception is where the acquisition is simply for the purposes of a restructuring and inserts a new holding company. This prohibition applies to all takeovers where the offer is announced on or after 4 March 2015.

If you have any questions or concerns please do not hesitate to contact the Edwin Coe Corporate team.


Edwin Coe Corporate Blog: One small slip…

It took over 100 years to build up but only one small typo to bring down.

Taylor & Sons Ltd, a Welsh engineering company had a 124 year history, a workforce of 250, and a wide array of customers.

Unfortunately, on 20 February 2009, Companies House wrongly recorded that the company had been wound up. An error with devastating consequences for Taylor & Sons.

In fact, it should have been an entirely different company, Taylor & Son Limited – without an ‘s’ – which should have been recorded by Companies House. And, although the error was corrected on 23 February 2009, the damage suffered by the company in the intervening period was catastrophic with both credit rating agencies and suppliers picking up on the incorrect news. Orders were lost, credit lines were withdrawn and the business was effectively destroyed. It was placed into administration just three months later.

The company’s co-owner and director sued Companies House for “false publication” following the incident and, in a ruling handed down in the High Court on 27 January 2015, Mr Justice Edis found that the Registrar of Companies had a duty to take “reasonable care” to ensure that an order was not registered against the wrong firm – accordingly, Companies House was liable for the company’s demise.

Damages have not yet been assessed but the claimants have valued their losses at just under £9m.

If you would like any further information about this or related topics, please contact the Edwin Coe Corporate & Commercial team.

Edwin Coe Corporate Blog: Corporate directors – the final curtain?

Changes to the law regarding use of corporate directors are planned in a bill that is currently going through parliament which will introduce a ban on corporate directors – subject to certain exceptions.

There are cases where it is perfectly legitimate to use a corporate director and the classic example is where a parent company appoints a corporate director to the board of its subsidiaries. This gives the parent company flexibility in that different people can represent the corporate director at board meetings. However the system is open to abuse in other cases and the proposed ban is designed to stop these. The abuse stems from the fact that companies are not required to provide information on the beneficial owners of corporate directors and so individuals can appoint corporate directors to hide the fact that they control a company and then use the company to help them carry out illegal activities. This can make it next to impossible to identify the real controller of a company, and in cases of infringement decreases the likelihood of a successful outcome for law enforcement and tax authorities, especially where the corporate director is an offshore company.

As things stand every company has to have at least one director who is a “natural person” (i.e. a human being) and this requirement was introduced in the Companies Act 2006. The changes (being introduced by the Small Business Enterprise and Employment Bill) will bring in a blanket prohibition on corporate directors (subject to a transitional 12 month period to allow existing appointments to be replaced), but the legislation would allow the Secretary of State to provide for exceptions to the prohibition where use of corporate directors is perceived either to be of value or represents a relatively low risk.

Consultation on the scope of the exceptions are underway and possible exceptions include:

  • UK companies with shares admitted to trading on regulated markets;
  • Large companies in group structures (where the case for an exception is regarded as being finely balanced); and
  • Certain sector companies subject to extra regulation (including charitable companies and trustee companies of pension funds).

This tightening of the rules is designed to coincide with similar efforts to improve transparency in company ownership and control at an international level and is part of the Government’s programme of measures designed to enhance confidence in the UK business environment. Subject to Parliamentary approval, the bill is expected to come into force in March 2015.

If the bill is passed and your company has a corporate director, it will be advisable to check whether the corporate director falls within one of the exceptions (when they are published), otherwise there will be the 12 month grace period to amend your company’s director appointments.

If you would like any further information about this or related topics, please contact the Edwin Coe Corporate & Commercial team.

Corporate Blog: Autumn Statement – An end to the avoidance of stamp tax charges

As part of his Autumn Statement, the Chancellor yesterday announced the government’s intention to put an end to the practice of avoiding stamp tax charges on UK company takeovers by structuring them as ‘cancellation’ schemes of arrangement.

A ‘cancellation’ scheme of arrangement works by cancelling the target company’s shares through a reduction of capital and the reserve created is then applied in paying up new shares which are issued direct to the acquiring company. As there is no transfer of the target company’s shares in a ‘cancellation’ scheme, the normal stamp duty of 0.5% payable on a transfer of shares in UK companies is avoided.

The government has announced that it will bring forward regulations by early 2015 to prohibit the use of ‘cancellation’ schemes in takeovers and bring an end to the avoidance of stamp tax charges in this way.

We will report further on this once the regulations have been presented. However if you have any questions or concerns please do not hesitate to contact the Edwin Coe Corporate team.

Our Private Client and Tax team have also produced an update following the Autumn Statement. To read this please click here.

Edwin Coe Corporate Blog – AIM formalises its approach to sanctions after developments in Ukraine.

The London Stock Exchange’s AIM Team has released a notice (AIM Notice 40) alerting AIM companies and nominated advisers to their continuing need to keep up to date with international sanctions and to have due regard to their obligations in relation to them, both generally and particularly in the context of a nominated adviser’s consideration of whether a company’s shares are appropriate for admission to trading on the AIM market.

The release of the Notice was prompted by the developments in the Ukraine which resulted in the recent European Union sanctions against Russia, and refers to the consolidated list of persons and entities subject to UK and EU financial sanctions which is maintained on the HM Treasury website at

The AIM Notice also draws attention to the full text of the two EU Council Regulations (numbers 833/2014 and 960/2014) which provide for further restrictive measures against Russia. The London Stock Exchange requires all AIM companies to inform their nominated adviser immediately, if either now, or at any time in the future, they fall within these Regulations (or any amendments to them).

For so long as the sanctions remain in force, the Exchange does not expect to admit securities to trading on AIM which are issued by companies within the scope of the Regulations or any subsequent amendments. The AIM application process has been modified accordingly and the AIM application form (to admit securities to trading on AIM) has been changed to includes a confirmation that the company making the application does not fall under Articles 5.1 or 5.2 of Council Regulation (EU) No 833/2014, as amended by Council Regulation (EU) No 960/2014.

The Notice also serves as a timely reminder of the impact of international sanctions generally and the need for companies to observe them.  If a company is in breach of any sanctions this is likely to affect its appropriateness as an existing or applicant AIM company.

The full text of the AIM Notice is available via the following link:

Edwin Coe’s Corporate group has significant experience in advising on AIM market regulation and legal issues arising from an application for admission to AIM and the market’s continuing obligations. If you would like any further information about these or related topics, please contact Nick Williams by emailing

Review of ISDX Growth Market Rules – Implications for eligibility assessment of market participants.

ISDX (ICAP Securities & Derivatives Exchange Limited) has announced that it is conducting a comprehensive review of the entry requirements and Rulebook for the ISDX Growth Market (previously known as the PLUS Market). The current ISDX Growth Market Rulebook was adopted on 9 July 2013, following the market’s acquisition by ICAP. ISDX say that the review is being carried out to ensure an appropriate balance between achieving its regulatory objectives, whilst still making the market attractive.

ISDX welcomes contributions from stakeholders to the review of the rules and entry requirements, which can be provided to Patrick Birley, CEO of ISDX, at or to the ISDX team at

The review will be followed by a public consultation on any future rule changes.

ISDX have also stated the review will impact on the implementation of Guidance Notes 4.7 and 5.2 of the ISDX Growth Market rules. These provide that companies already admitted to the ISDX Growth Market on 9 July 2013 (the date the Rulebook was adopted) will undergo an assessment from 9 January 2015 (eighteen months after the adoption of the Rulebook) to see whether they comply with the entry requirements for new applicants to the market provided by Rules 4 and 5. This is a one-off assessment and not a continuing obligation.

Rule 4 provides five tests for an applicant company (other than an investment vehicle) which apply to: the proportion of its shares in public hands (as a percentage of issued share capital), revenue, EBITDA, historic revenue records and gross assets (including cash). To meet the Rule 4 requirements, an already admitted company subject to assessment must demonstrate to the satisfaction of ISDX, based on its most recent audited financial information, that it achieves a cumulative minimum total of twenty points under the tests. Under Rule 5, an investment vehicle is required to raise a minimum of £500,000 (or the currency equivalent) by the subscription of shares at the time of admission. If an investment vehicle didn’t raise that amount on admission, it will need to have raised £500,000 net of expenses subsequently.

Companies not meeting the requirements under the assessment would have to leave the market.

ISDX has confirmed that, although the assessment of companies’ compliance with Rules 4 and 5 would proceed as planned, non-compliant companies will not be withdrawn from trading while the review of the Rulebook and entry requirements is in progress, or until further notice. The results of the assessment will be taken into account during the review.

The review and consultation looks as if it will be continuing well into next year, and companies on the market should not assume that there will be any relaxation of the requirements of Guidance Notes 4.7 and 5.2.

Edwin Coe’s corporate group has significant experience in advising on ISDX markets’ regulation and legal issues arising from an application for admission to a market and the continuing obligations. If you would like any further information about this, please contact Nick Williams by emailing

London Stock Exchange – Changes to the AIM and Nomad Rules

In January 2014, the Edwin Coe corporate team reported on the proposed changes to the AIM and Nomad Rules (read blog) and now provide an update…

AIM Companies and Nominated Advisers must be aware of the Rule changes including a requirement to update company websites.

On 13 May 2014 The London Stock Exchange issued an AIM Notice (No. 39) that it had implemented changes to the AIM Rules for Companies (AIM Rules) and the AIM Rules for Nominated Advisers (Nomad Rules) as well as a consequential change to the AIM Disciplinary Procedures and Appeals Handbook.

The Notice and amendments to the rules and handbook can be found at

The Exchange received 28 responses to its consultation on the changes which were proposed in January 2014 and has commented that the objectives of the proposed changes were positively welcomed.

The changes came into immediate effect, except for the new requirements for AIM company websites under Rule 26 of the AIM Rules, which must be implemented by 11 August 2014.

Changes to the AIM Rules for Nominated Advisers

The changes to the Nomad Rules include the following, reflecting the continuing restructuring of nominated adviser firms and the reduced frequency of transactions over recent years.

Emphasising that nominated adviser status should not be regarded as a licence that can be sold or transferred, rules 2 and 11 of the Nomad Rules have been amended so that a nominated adviser is required to inform the Exchange as soon as possible of any potential material change to its structure or organisation or any change of control which is reasonably likely. Following a change of control, a new application for nominated adviser status is required, for which the Exchange will consider in particular the new controller and its ability to satisfy in its own right the requirements set out in rules 1-3 of the Nomad Rules (criteria for eligibility as a nomad and preservation of the reputation and integrity of AIM).

A key factor in achieving or maintaining nominated adviser status is the requirement for a firm to have a minimum of 4 Qualifying Executives. Whereas no changes have been made to the criteria for new Qualified Executive applicants, some latitude has been introduced so that under rule 4 existing Qualified Executives will remain eligible:

  • if they have acted in a lead corporate finance capacity on three relevant transactions in the last five years rather than the current three year period, and
  • if they have over five years’ continuous experience as a Qualified Executive and are actively involved in a corporate finance advisory role, in relation to AIM in particular, provided they have acted in a lead corporate finance role on one relevant transaction in the last five years.

Changes to the AIM Rules for Companies

The changes to the AIM Rules are mainly of an administrative and clarificatory nature, although the Exchange has highlighted two substantive amendments:

  • clarification that when an AIM company de-lists, the Exchange retains jurisdiction over it for the purpose of investigating and taking disciplinary action in relation to actual or suspected AIM Rule breaches; and
  • rule 11 (general disclosure of price sensitive information) has been amended so as to clarify that the new developments requiring disclosure that are referred to (changes in: financial condition, sphere of activity, performance of business or expectation of performance) are by way of example only.

Changes to the Guidance Notes (which form part of the AIM Rules) reflect (amongst other matters) technical guidance previously given in the Exchange’s Inside AIM publication.

AIM companies should review their websites to ensure they comply by 11 August 2014 with the changes to Rule 26 of the AIM Rules, requiring additional information to be displayed.

Edwin Coe’s corporate group has significant experience in advising on AIM regulation and legal issues arising from an application for admission to trading on AIM, the continuing obligations for AIM companies and AIM market transactions.

If you would like any further information about this, please contact Nick Williams by emailing