UKLA Reduces Burden Of Joint Venture Rules

The UK Listing Authority has announced that significant changes are to be made to the Listing Rules that relate to joint ventures with effect from 6 August 2007. These changes will make it much easier for listed companies and their subsidiaries to be involved in joint venture transactions.

The main changes are:

• Where the JV agreement includes exit provisions where the price is uncapped (generally because it is to be market value at the time of exit), this will only be treated as a Class 1 transaction (and therefore needing shareholder approval) if any of the other class tests indicate that it should be Class 1 or 2. If all the other Class Tests indicate that it should be Class 3, then the uncapped exit provisions will mean it is treated as a Class 2 transaction (and therefore requiring only to be announced in sufficient detail in accordance with specific requirements in chapter 10 of the Listing Rules).