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Equity security
Practical Law UK Glossary 0-107-6225 (Approx. 4 pages)
Glossary
Equity security
The meaning of this term depends on the context in which it is used:
- For the purposes of chapter 3 of Part 17 of the Companies Act 2006 (Allotment of equity securities: Existing shareholders' right of pre-emption):
- Ordinary shares in the company; or
- Rights to subscribe for, or to convert securities into, ordinary shares in the company.
(Section 560, Companies Act 2006.) - For the purposes of the Listing Rules, equity shares and securities convertible into equity shares.
- For the purposes of the UK Prospectus Regulation, shares and other transferable securities equivalent to shares in companies, as well as any other type of transferable securities giving the right to acquire any such securities as a consequence of their being converted or the rights conferred by them being exercised, provided that securities of the latter type are issued by the issuer of the underlying shares or by an entity belonging to the issuer’s group (Article 2(b), UK Prospectus Regulation).
The FCA Handbook glossary sets out the full definition of this term. When considering this term in the context of financial services, reference should be made to the FCA Handbook glossary definition of equity securities.