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Good day Sir,
My understanding is that the benefits of such an arrangement is likely to be enjoyed by the unquoted company. So my question is why would a listed company enter in such an arrangement whereby they not only they lose control of their company but also, they become non existent in the eyes of the public due to the fact the new company takes on the unlisted company’s name?
Is it because of the stringent regulations and maybe cashflow issues? Just a thought
Several things.
Firstly, there is no requirement for the new company to take on the unlisted companies name – they could keep the public companies name.
Secondly, the unquoted company could be a much bigger company than the quoted one and therefore have better prospects for the shareholders of the quoted company.
Thirdly, the quoted company being used to enable the unquoted company to go public is often one that has done little trading recently and is very much a ‘shell’ company.
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