| Accountant's report - A report by a reporting accountant included in an investment circular, in which the reporting accountant normally expresses a “true and fair, for the purposes of the investment circular” opinion on historical financial information relating to the issuer and its subsidiaries in accordance with SIR 2000 “Investment Reporting Standards applicable to public reporting engagements on historical financial information ”. |
| Admission and Disclosure Standards - The Admission and Disclosure Standards published by the London Stock Exchange, for companies admitted or seeking to be admitted to trading by the Exchange. |
| Agreed-upon procedures [engagements] - An engagement where the reporting accountant is engaged to carry out procedures of an audit or assurance nature, that the reporting accountant, the entity and any appropriate third parties have agreed, and to report on factual findings. The recipients of the report must form their own conclusions from the report by the reporting accountant. The report is restricted to those parties that have agreed to the procedures to be performed, since others, unaware of the reasons for the procedures, may misinterpret the results. |
| AIM - The Alternative Investment Market operated by the London Stock Exchange plc. The market is for smaller growing companies. Securities admitted to AIM are unlisted. |
| AIM Admission Document - The document prepared in connection with an application for admission of an issuer's securities to trading on AIM. If upon admission a prospectus is required in accordance with the Prospectus Rules, such prospectus may serve as the AIM Admission Document. |
| AIM Rules - The Rules of the Alternative Investment Market. |
| CESR - The Committee of European Securities Regulators. |
| Circular - A circular issued by any company to its shareholders and/or holders of its debt securities in connection with a transaction, which does not constitute a prospectus, listing particulars or AIM admission document. |
| City Code - The City Code on Takeovers and Mergers, published by the Panel on Takeovers and Mergers. |
| Class 1 circular - A circular relating to a Class 1 transaction. |
| Class 1 transaction - A transaction where one or more of a number of specified percentage ratios exceed a predetermined level as specified in Chapter 10 of the Listing Rules. |
| Comfort letter - A private letter from the reporting accountant, usually prepared at the request of the issuer and/or the sponsor, where relevant. It is intended to provide the addressees with comfort (in the form of an opinion or a report on the results of specific procedures carried out by the reporting accountants) regarding matters relevant to the addressees' responsibilities. |
| Completion date of the transaction - The date by which any offer contained in the circular must have been accepted or application made for shares or other securities to be issued, or the date on which shareholders vote to approve the transaction. |
| Consent letter - A letter whereby the reporting accountants consent to the inclusion in an investment circular of references to their name or the inclusion of any of their reports or letters which are to be published therein. |
| Due diligence - The process whereby the directors of the issuer and other parties, whether as principal or in an advisory capacity, satisfy themselves that the transaction is entered into after due and careful enquiry and that all relevant regulatory and/or legal requirements have been properly complied with. There is no generally accepted definition of required procedures for this purpose and where others (such as reporting accountants) are engaged to carry out work that will form part of the process, it is for the instructing parties to make clear what is required of those others in the particular circumstances. |
| Engagement partner - The partner or other person in the firm who is responsible for the engagement and its performance, and for reports that are issued on behalf of the firm, and who, where required, has the appropriate authority from a professional, legal or regulatory body. |
| Financial information - The term is used to signify the specific information presented in the form of a table upon which a reporting accountant reports. Typically, this information encompasses a number of accounting periods. |
| Financial statements - A balance sheet, profit and loss account (or other form of income statement), statements of cash flow and total recognised gains and losses, notes and other statements and explanatory material. In order to avoid confusion the term financial information is used throughout the SIRs to refer to the information upon which the reporting accountant reports. When the term financial statements is used within the SIRs this refers to financial statements from which the financial information has been derived by the issuer. |
| FSA - Financial Services Authority. |
| FSMA - Financial Services and Markets Act 2000. |
| IFRSs - International Financial Reporting Standards issued by the International Accounting Standards Board. This term incorporates all International Financial Reporting Standards, International Accounting Standards (IASs) and Interpretations originated by the International Financial Reporting Interpretations Committee (IFRIC) or the former Standards Interpretation Committee of the IASC. |
| Investment circular - A generic term describing any document issued by an entity pursuant to statutory or regulatory requirements relating to securities on which it is intended that a third party should make an investment decision, including a prospectus, listing particulars, circular to shareholders or similar document. |
| ISAs (UK and Ireland) - International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. |
| Issuer - For the purposes of the Prospectus Rules “A legal person who issues or proposes to issue securities”. For the purposes of the Listing Rules “Any company or other legal person or undertaking (including a public sector issuer), any class of whose securities has been admitted to listing, or is the subject of an application for admission to listing”. |
| Listing particulars - A document not being a Prospectus prepared in connection with an admission of securities to the Official List. |
| Listing Rules - The part of the FSA's Handbook entitled “Listing Rules” governing the conduct of companies whose securities are admitted to the Official List. |
| London Stock Exchange - The London Stock Exchange plc. |
| Long form report - A private report with a restricted circulation, normally prepared by the reporting accountants on the instructions of, and addressed to, the sponsor, where relevant, and the directors of the issuer as part of their due diligence, dealing with agreed matters including commentary on financial and other information in an orderly and relevant form for a specific purpose. |
| Main Market - The London Stock Exchange's market for larger and established companies. Securities admitted to the Main Market are listed. |
| Nominated adviser - A corporate broker, investment banker or other professional adviser approved by the London Stock Exchange to act as a nominated adviser to an AIM company under the AIM Rules. |
| Ofex - An independent, self regulated, UK market for smaller companies. |
| Official List - The Official List maintained by the FSA. |
| Outcome - The outcome of the evaluation or measurement of a subject matter is the information that results from the directors applying the suitable criteria to the subject matter. Examples of outcomes are historical financial information and a directors' profit forecast and related disclosures that are included in an investment circular. |
| Partner - Any individual with authority to bind a firm of reporting accountants with respect to the performance of any engagement in connection with an investment circular. |
| PD Regulation - the implementing EU Regulation 809/2004 that provides the detailed rules concerning Prospectuses and their contents. Much of the text of this regulation is included within the Prospectus Rules. |
| Private reporting engagement - An engagement in which a reporting accountant does not express a conclusion that is published in an investment circular. |
| Professional Securities Market - A market for debt, convertibles and depository receipts, which is operated and regulated by the London Stock Exchange. This is not a regulated market as defined by the Prospectus and Transparency Directives. |
| Profit estimate - Historical financial information for a financial period which has expired but for which the results have not yet been published. |
| Profit forecast - The PD Regulation defines a profit forecast as “a form of words which expressly states or by implication indicates a figure or a minimum or maximum figure for the likely level of profits or losses for the current financial period and/or financial periods subsequent to that period, or contains data from which calculation of such a figure for future profits or losses may be made, even if no particular figure is mentioned and the word “profit” is not used. Where a profit forecast relates to an extended period and/or is subject to significant uncertainty it is sometimes referred to as a projection. |
| Pro forma financial information - Financial information such as net assets, profit or cash flow statements that demonstrate the impact of a transaction on previously published financial information together with the explanatory notes thereto. |
| Projection - See “Profit forecast”. |
| Prospectus - The document issued in accordance with the Prospectus Rules in connection with either a public offer or an admission of securities to trading on a regulated market. |
| Prospectus Regulations - The UK statutory instrument which makes amendments to Part VI of FSMA and to certain secondary legislation. |
| Prospectus Rules - The FSA's Handbook part “Prospectus Rules” which together with the PD Regulation and the changes to FSMA Part VI made by the Prospectus Regulations, implement the Prospectus Directive into UK law. In respect of Prospectus content requirements, the Prospectus Rules reproduce the Annexes to the PD Regulation. Accordingly, references to the contents requirements in Annexes to the Prospectus Rules are also references to the Annexes to the PD Regulation. |
| Public offer - An offer to the public in any form to subscribe for securities in an issuer. |
| Public reporting engagement - An engagement in which a reporting accountant expresses a conclusion that is published in an investment circular and which is designed to enhance the degree of confidence of the intended users of the report about the “outcome” of the directors' evaluation or measurement of “subject matter” (usually financial information) against “suitable criteria”. |
| Report - This term encompasses letters that the reporting accountant may be required to send by regulation or arising from the terms of the engagement. |
| Reporting accountant - An accountant engaged to prepare a report for inclusion in, or in connection with, an investment circular. The reporting accountant may or may not be the auditor of the entity issuing the investment circular. The term “reporting accountant” is used to describe either the engagement partner or the engagement partner's firm. The reporting accountant could be a limited company or an engagement principal employed by the company. |
| Reporting accountant's criteria - A subset of suitable criteria which the reporting accountant's engagement requires the reporting accountant to consider. Reporting accountant's criteria are set out in appendices to the SIRs. |
| Securities - Are as defined by Article 4 of the EU's Markets in Financial Instruments Directive with the exception of money- market instruments having a maturity of less than twelve months. |
| Sponsor - For the purposes of SIRs, “sponsor” is a generic term which includes any one or more of the following to whom the reporting accountant has agreed, in its engagement letter, to address a relevant report: |
| (a) | a person approved, under section 88 of FSMA, by the FSA as a sponsor. The FSA's sponsor regime applies to applications for admission to listing and major transactions. The sponsor regime is designed to ensure that effective due diligence is undertaken on issuers and transactions to ensure that issuers are eligible for listing, that major transactions are properly evaluated and that all relevant information has been included in the investment circular. Listing Rule 8.2.1 sets out the circumstances when an issuer must appoint a sponsor; |
| (b) | a nominated adviser approved by the London Stock Exchange in connection with an application for admission to AIM and subsequent transactions by a company with securities traded on AIM; and |
| (c) | in connection with any transaction, any party, other than the issuer, who may have specific responsibility for the preparation and/or contents of an investment circular. |
| Subject matter - The subject matter of an engagement is that which is being evaluated or measured against “suitable criteria”. Examples of subject matter are the entity's financial position and the directors' expectation of the issuer's profit for the period covered by a profit forecast. |
| Suitable criteria - Criteria are the benchmarks used to evaluate or measure the subject matter. Suitable criteria are usually derived from laws and regulations and are required by directors to enable them to make reasonably consistent evaluations or measurements of the subject matter. With respect to public reporting engagements the suitable criteria for specific types of engagement are described in the individual SIR dealing with such engagements. |
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