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If a company trading on LSE:AIM decides to delist and move to a Chinese market, what happens to the PI's and general shareholders?

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Source

Rule 41 of the AIM Rules sets out the procedure for delisting. In summary, a company that wishes to cancel the right of any of its trading securities must:

  • notify the market through a regulatory information service of the proposed cancellation date;
  • notify the London Stock Exchange (the “Exchange”) of its intended cancellation and its reasons for cancellation including its preferred cancellation date; and
  • obtain shareholder approval.

The notification to the Exchange should be made by the company’s nominated adviser and should be given at least 20 business days prior to the intended cancellation date (the 20 business days’ notice requirement is a minimum).

Any cancellation of a company’s securities on AIM will be conditional upon seeking shareholder approval in general meeting of not less than 75% of votes cast by its shareholders present and voting (in person or by proxy) at the meeting.

The notification to shareholders should set out the preferred date of cancellation, the reasons for seeking the cancellation (for example annual fees to the Exchange, the cost of maintaining a nominated adviser and broker, professional costs, corporate governance compliance, inability to access funds on the market), a description of how shareholders will be able to effect transactions in the AIM securities once they have been cancelled and any other matters relevant to shareholders reaching an informed decision upon the issue of the cancellation.

Cancellation will not take effect until at least 5 business days after the shareholder approval is obtained and a dealing notice has been issued by the Exchange.

It should be noted that there are circumstances where the Exchange may agree that shareholder consent is not required for the cancellation of admission of a company’s shares, for example (i) where comparable dealing facilities on an EU regulated market or AIM designated market are put in place to enable shareholders to trade their AIM securities in the future or (ii) where, pursuant to a takeover which has become wholly unconditional, an offeror has received valid acceptances in excess of 75% of each class of AIM securities. The company’s Nominated Adviser will liaise with the Exchange to secure a dispensation if relevant.

So you should receive information from the company regarding the due process informing you about your options.

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You would still be the legal owner of the shares, so you would almost certainly need to transfer them to a broker than supports the Hong Kong Stock Exchange (which allows you to trade on the Shanghai exchange).

In order to delist they would need to go through a process which would include enabling shareholders to continue to access their holdings.

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  • And if I didn't want to set up an account (or deal with annual forms for the sake of a single holding) what would be my options? Keep the paper certificates or sell? – WolfOfCoronationSt Jan 29 '16 at 13:14
  • Probably. There would be a good chance of there being a purchase program. – William Dunne Jan 29 '16 at 13:16
  • Thanks for your help. One last question, as I've not personally had a stock delist before (that's AIM for you!) would the purchase program typically be at market value, under, or at premium? – WolfOfCoronationSt Jan 29 '16 at 13:23
  • I wouldn't know to be honest, there isn't much to go by. The only reason I think there is a good chance is because of the regulatory issues around listing in China for investors. There wouldn't be a buyback scheme when moving from NASDAQ to NYSE for example – William Dunne Jan 29 '16 at 13:26

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