AIM DELISTING

On 11 November 2020, Mereo BioPharma Group plc (the “Company” or “Mereo”) announced the cancellation of admission to trading on AIM of the Company’s Ordinary Shares (the “AIM Delisting”).

The announcement can be found here.

The shareholder circular can be found here.

As set out in the expected timetable of events below, it is expected that the final day of trading of the Ordinary Shares on AIM will be 17 December 2020 with the AIM Delisting taking effect at 7.00 a.m. on 18 December 2020.

Last date for receipt by Link Group from certificated shareholders of duly completed block transfer  participation requests and original share certificates

4 December 2020 at 11.00 a.m.

Last date for receipt by Citibank from CREST holders of duly completed issuance forms

9 December 2020

Expected date of issuance of ADSs to block transfer participants

16 December 2020

Expected date of posting of ADS receipts to shareholders by Citibank

16 December 2020

Last day of dealings in the Ordinary Shares on AIM                                                     

17 December 2020

Cancellation of admission to trading on AIM of the Ordinary Shares

18 December 2020 at 7.00 a.m.

Notes

  1. References to time in this document are to London time unless otherwise stated.
  2. Each of the times and dates in the above timetable are subject to change. If any of the above times and/or dates change, the revised times and/or dates will be notified to shareholders by announcement through a Regulatory Information Service.

 

FREQUENTLY ASKED QUESTIONS

This document contains some frequently asked questions for holders of Ordinary Shares and holders of Mereo’s American Depositary Shares (“ADSs”) relating to the AIM Delisting.

 

Existing holders of ADSs not also holding Ordinary Shares do not need to take any action as a result of the AIM Delisting.

Brokers seeking further information should contact the Company’s depositary bank, Citibank, by email at UKsettlements@citi.com

Further information is also available on Mereo’s website at: www.mereobiopharma.com/AIM-Delisting

1. Do I need to sell my AIM-quoted Ordinary Shares or must I convert them into Mereo’s Nasdaq listed ADSs?

Holders of Mereo Ordinary Shares now have three options:

(a) You may choose to convert your Ordinary Shares into ADSs tradeable on Nasdaq

If your investment is currently held in CREST and managed by a broker, your broker will be able to manage the conversion process for you in accordance with the process set out on Appendix A of this document. If you wish to convert your Ordinary Shares into ADSs, you should contact your broker to initiate this process without delay. Please see question 6 below “My broker currently holds my Ordinary Shares within a CREST nominee account – how do I convert my shares to ADSs”.

If you hold your investment in certificated form and wish to convert it into ADSs without engaging the services of a broker, it is possible for ADSs to be held on the books of the Company’s ADS depositary, Citibank, in Direct Registration Shares (DRS), electronic book-entry format. For details on how to convert your Ordinary Shares, please see question 3 below “I hold my shares in certificated form and I want to convert to ADSs prior to the AIM Delisting but do not want to engage a broker at this time – how do I do this?”.

(b) You may choose to continue to hold your Ordinary Shares

Ordinary Shares will continue to be a valid equity interest in the Company with full voting rights, rights to future dividends, etc., as currently enjoyed by holders of Ordinary Shares. However, following the AIM Delisting there will be no public market in the United Kingdom on which the Ordinary Shares can be traded. Please see question 8 below “Can I continue to hold Ordinary Shares after the AIM Delisting”.

(c) You may choose to sell your AIM-quoted Ordinary Shares prior to the AIM Delisting becoming effective

If you wish to maintain an equity interest in Mereo, you could choose to reinvest in Mereo by using the proceeds of the sale of your Ordinary Shares to buy Nasdaq listed ADSs (Nasdaq ticker: MREO). Dealing and tax costs would likely apply to the AIM and/or Nasdaq transactions.

2. I currently hold my Ordinary Shares in the form of a paper certificate – how does the AIM Delisting affect me?

Ordinary Shares in certificated form are not currently immediately tradeable as, in order to sell them, the share certificates need to be deposited with a broker and “dematerialised” so that they are held in electronic form in CREST, which is the electronic system for the holding of shares in uncertificated form and paperless settlement of share trades. Only when the Ordinary Shares have been converted into electronic form can they then be traded on AIM.

If you choose to retain your Ordinary Shares in certificated form but do not convert them into ADSs prior to the AIM Delisting, in order to sell them following AIM Delisting, you will need to use a broker with UK and US capabilities to firstly dematerialise your UK share certificate into CREST and thereafter to liaise with the Company’s depositary, Citibank, to issue the respective ADSs for your broker to sell on your behalf. Your broker will need to contact Citibank in order for your Ordinary Shares to be converted into ADSs and credited to the account held by your broker. Upon receiving instructions to do so, your broker would then trade your ADSs via Nasdaq and would remit the proceeds to your personal account. Please also see question 8 below “Can I continue to hold Ordinary Shares after the AIM Delisting”.

3. I hold my shares in certificated form and I want to convert my Ordinary Shares to ADSs prior to the AIM Delisting but do not want to engage a broker at this time – how do I do this?

If your investment is currently held in certificated form outside of CREST, the Company’s Ordinary Share registrar, Link Group, will facilitate a block transfer process, on behalf of the Company, for those shareholders who do not already hold their Ordinary Shares via a broker and who may wish to participate in a managed conversion process. This process is only available prior to the AIM Delisting to holders of Ordinary Shares in certificated form. Subject to the requisite paperwork being returned to Link Group by the required deadline, being 11.00 a.m. on 4 December 2020, the Company’s registrar, Link Group, will arrange for the relevant Ordinary Shares to be transferred into CREST and then transfer the shares to Citibank, who will then arrange for the conversion of your Ordinary Shares into ADSs to be transmitted to an account held in the name of the relevant shareholder on the books of the depositary, in Direct Registration Shares (DRS), electronic book-entry format. Holders of Ordinary Shares in certificated form will be sent a personalized block transfer participation request form, an example of which is set out in Appendix B. If a shareholder wishes to participate in this managed conversion process, they should complete the form and return it to Link Group in accordance with the instructions set out in the form by 11.00 a.m. on 4 December 2020. Further block transfer participation request forms (which are not personalised) are available on the Company’s website at www.mereobiopharma.com/AIM-Delisting, or can be requested from Link Group by calling 0371 664 0321. Calls are charged at the standard geographic rate and will vary by provider. Calls from outside the UK will be charged at the applicable international rate. Lines are open 9.00 a.m. to 5.30 p.m., Monday to Friday, excluding public holidays in England and Wales. Completed transfer forms and original share certificates may be returned to Link Group, for UK shareholders only, by using the pre-paid envelope sent to you. Both UK shareholders and non-UK shareholders may prefer to return transfer forms and original share certificates using registered post.

Shareholders who hold their Ordinary Shares in certificated form and who do not elect to participate in this block transfer process may utilise the services of a broker to facilitate conversion.

Following conversion of Ordinary Shares into ADSs in DRS form, note that all DRS registered holders will be subject to US stock transfer procedures and guidelines. Holders should consult with a broker to determine applicable stock transfer requirements in relation to future transfers of ADSs. These requirements may include a medallion signature guarantee to effect certain transfers. Further details on medallion signature guarantees may be found at www.investor.gov/introduction-investing/investing-basics/glossary/medallion-signature-guarantees-preventing.

4. I have already initiated the dematerialisation of my UK share certificate into CREST in order to convert my Ordinary Shares into ADSs – what should I do?

In order to participate in the block transfer process being facilitated by Link Group, you will need to return your original share certificate with your block transfer participation request form. Accordingly, if you have already returned your share certificate in order to dematerialise it into CREST, you will not be able to participate in the block transfer process. In these circumstances, you should continue with the dematerialisation process and contact your broker to ensure that this and the conversion into ADSs is completed before the AIM Delisting.

5. I currently hold my Ordinary Shares in uncertificated/electronic form in CREST – how does the AIM Delisting affect me?

If your investment is currently held in electronic form in CREST and managed by a broker, your broker will be able to manage the conversion process for you in accordance with the process set out in Appendix A of this document.

If your Ordinary Shares are currently held in electronic form in CREST and you do not convert them to ADSs before the AIM Delisting, your Ordinary Shares will continue to be held in your CREST account, but in unquoted form. Following the AIM Delisting, you will not be able to trade any of your Ordinary Shares in CREST as the Company will have cancelled its admission to trading on AIM. Please see question 8 below “Can I continue to hold Ordinary Shares after the AIM Delisting?”. Conversion of Ordinary Shares into ADSs following the AIM Delisting becoming effective may incur a UK stamp duty, or SDRT, charge (the rate of which is currently 1.5 per cent. of the market value of the shares converted), although in all cases professional advice should be sought as to the applicable tax treatment.

6. My broker currently holds my Ordinary Shares within a CREST nominee account – how do I convert my shares to ADSs?

Many UK brokers have the ability to hold and trade Nasdaq-listed securities. In order to continue holding a form of security in the Company that is readily tradeable, you should contact your broker without delay to request that Ordinary Shares are converted into ADSs by following the process set out on Appendix A of this document. Your broker will provide the Company’s depositary, Citibank, with certain details by email in relation to the conversion and will then transmit your Ordinary Shares electronically to Citibank’s UK custodian’s CREST account.

7. How does the price of Mereo’s Nasdaq listed ADSs compare to the price of an Ordinary Share on AIM?

Mereo currently maintains a listing of its ADSs on the Nasdaq Stock Market. Each ADS is a financial instrument that represents five Ordinary Shares. The price of each ADS is expressed in US dollars, and is linked to the value of the five Ordinary Shares that it represents. Currently, the price of an Ordinary Share on AIM can be compared to the price of Mereo’s Nasdaq listed ADSs by dividing the ADS price by five and then dividing by the US dollar to pounds sterling exchange rate to calculate the equivalent sterling denominated price per Ordinary Share.

As part of the AIM Delisting, holders of Ordinary Shares may convert such Ordinary Shares into ADSs (see question 1 “Do I need to sell my AIM-quoted Ordinary Shares or must I convert them into Mereo’s Nasdaq listed ADSs?” above). Once Ordinary Shares are converted into ADSs, the investment will be US dollar denominated instead of pounds sterling denominated. This means that when valued in pounds sterling, its value will fluctuate on a day-to-day basis in line with movements in £:US$ exchange rate.

Once the AIM Delisting takes effect on 18 December 2020, there will no longer be a published price for an individual Ordinary Share. It will, however, always be possible to calculate the value of an individual Ordinary Share in pounds sterling by taking the Nasdaq ADS market price, dividing by five and dividing by the US dollar to pounds sterling exchange rate. The Nasdaq ADS share price is, and will continue to be, available via Mereo’s website at www.mereobiopharma.com or may otherwise be found online on a broad range of financial websites.

8. Can I continue to hold Ordinary Shares after the AIM Delisting?

Should you wish to do so, it will be possible to continue to hold Ordinary Shares after the AIM Delisting. However, shareholders should be aware that the Ordinary Shares will not be admitted to trading on any public market in the United Kingdom and the Ordinary Shares will not be tradeable on Nasdaq in this form.

Should you wish to sell your Ordinary Shares following the AIM Delisting becoming effective, you will likely be required first to convert such Ordinary Shares into ADSs via the Company’s depositary bank, Citibank, and any sale of the resulting ADSs will likely need to be via a broker with US share trading capability. Please note that a conversion of Ordinary Shares into ADSs following the AIM Delisting becoming effective may incur a UK stamp duty, or SDRT, charge (the rate of which is currently 1.5 per cent. of the market value of the shares converted), although in all cases professional advice should be sought as to the applicable tax treatment. Fees of up to US$0.05 per ADS may also be levied by the Company’s depositary bank upon such conversion (although the depositary bank has confirmed that no such fee will be charged to holders on any conversion of Ordinary Shares into ADSs from the date of this document until (and including) 18 December 2020).

9. I already hold Mereo’s ADSs – Am I affected by the AIM Delisting?

Mereo’s Nasdaq-listed ADSs will continue to trade as normal. Existing holders of ADSs not also holding Ordinary Shares do not need to take any action in connection with the AIM Delisting.

10. How do I buy and sell Mereo’s Nasdaq listed ADSs?

The majority of brokers in the UK have the capability to hold US exchange-listed securities and are capable of buying and selling them for you. A small annual holding cost, currently US$0.02 per ADS per annum, is levied by the Company’s depositary bank, Citibank, and brokers may also charge an annual fee for holding a US security on your behalf.

Should you wish to increase your holding in the Company, you should be able to purchase further ADSs via your broker. You will need to instruct your broker to purchase Mereo ADSs (Nasdaq ticker: MREO).

If you wish to continue to hold your investment in the Company directly, without engaging the services of a broker, it is possible for ADSs to be held on the books of the Company’s depositary, in Direct Registration Shares (DRS), electronic book-entry format. If a shareholder wishes to receive ADSs without engaging the services of a broker, please see question 3 above “I hold my shares in certificated form and I want to convert to ADSs prior to the AIM Delisting but do not want to engage a broker at this time – how do I do this?”.

11. Is there a cost to convert and hold my Mereo investment in the form of ADSs?

There will be no cost of converting your Mereo Ordinary Shares into ADSs prior to the date of the AIM Delisting. Thereafter, ADS conversion fees of up to US$0.05 per ADS may be charged by the Company’s depositary, Citibank.

An annual depositary service fee, currently US$0.02 per ADS, is levied to ADS holders by Citibank each March. This is typically paid and charged to your account by your broker on an annual basis.

Any questions regarding fees can be directed to citiadr@citi.com

12. How will the AIM Delisting affect the tax treatment of Mereo’s Ordinary Shares?

Mereo is not able to provide shareholders with any form of taxation advice and shareholders are strongly advised to seek their own professional advice in order to ascertain the consequences for them of continuing to hold Ordinary Shares following the AIM Delisting becoming effective, or converting Ordinary Shares into ADS form.

The Company’s understanding of the current position for individuals who are UK resident and UK domiciled under UK taxation law is as follows but it should be noted that the Company has not taken steps to confirm the current position with HMRC. Therefore, the following should not be relied upon by shareholders without taking further advice (and the Company accepts no liability whatsoever in respect of any tax information provided).

  • Following the AIM Delisting, Ordinary Shares should continue to be accepted by HMRC as qualifying as unlisted/unquoted securities for the purposes of certain specific UK tax rules (notably, the UK inheritance tax business property relief rules). Therefore, those shareholders who elect to continue to hold Ordinary Shares should continue to be regarded as holding unlisted/unquoted securities under those same rules.
  • Under HMRC’s stated practice those shareholders who elect to convert their holdings of Ordinary Shares to Nasdaq listed ADSs, should not be considered as disposing of the Ordinary Shares for UK capital gains tax purposes when transferring the shares to the Company's ADS depositary, Citibank, in exchange for issue of ADSs on the basis that the shareholder retains beneficial ownership of the shares.

It is recommended that shareholders obtain appropriate professional advice in respect of the application of other UK taxes.

It is expected that shareholders who elect to convert their holdings of Ordinary Shares to Nasdaq-listed ADSs following the AIM Delisting will incur a UK stamp duty, or SDRT, charge (the rate of which is currently 1.5 per cent. of the market value of the Ordinary Shares converted).

If you are in any doubt as to your tax position you should consult an appropriate professional adviser immediately.

13. Will the AIM Delisting affect my rights as a shareholder?

As a company incorporated in England and Wales, Mereo will continue to be subject to the requirements of the Companies Act 2006.

Following the AIM Delisting, the Company will no longer be subject to the AIM Rules for Companies or be required to retain the services of a nominated adviser. The Company will also no longer be subject to the QCA Corporate Governance Code. In addition, the Company will no longer be required to comply with the continuing obligations set out in the FCA’s Disclosure Guidance and Transparency Rules (DTRs) or, provided the Company’s securities remain outside the scope of the regulation, the EU Market Abuse Regulation (MAR) (as Nasdaq is not an in-scope exchange for the purposes of such legislation). In addition, the Company will no longer be subject to the provisions of the DTRs relating to the disclosure of changes in significant shareholdings in Mereo. The Company will, however, continue to comply with all regulatory requirements for the Nasdaq listing of its ADSs, including all applicable rules and regulations of the US Securities and Exchange Commission. Shareholders who continue to hold Ordinary Shares will continue to be notified in writing of the availability of key documents on our website, including publication of Annual Reports and Annual General Meeting documentation. Holders of ADSs will be able to continue to access all such information via the Mereo website. Holders of Ordinary Shares and ADSs will both be eligible to receive any future dividends that may be declared.

Following the AIM Delisting taking effect, as the Company will remain a public limited company incorporated in England and Wales but its securities will not be admitted to trading on a regulated market or multilateral trading facility in the United Kingdom (or a stock exchange in the Channel Islands or the Isle of Man), the City Code on Takeovers and Mergers (the “Code”) will only apply to the Company if it is considered by the Panel on Takeovers and Mergers (the “Panel”) to have its place of central management and control in the United Kingdom (or the Channel Islands or the Isle of Man). This is known as the “residency test”. The way in which the test for central management and control is applied for the purposes of the Code may be different from the way in which it is applied by the United Kingdom tax authorities, HMRC. Under the Code, the Panel looks to where the majority of the directors of the Company are resident, amongst other factors, for the purposes of determining where the Company has its place of central management and control.

Accordingly, following the AIM Delisting, the Panel has confirmed to the Company that the Code will not apply to the Company, and the Company and its shareholders will therefore not have the benefit of the protections the Code affords, including, but not limited to, the requirement that a person who acquires an interest in Ordinary Shares carrying 30 per cent. or more of the voting rights in the Company must make a cash offer to all other shareholders at the highest price paid in the 12 months before the offer was announced.

Notwithstanding the above, the Company may become subject to the Code in the future if any changes to the Board composition result in the majority of the directors being resident in the United Kingdom, Channel Islands or the Isle of Man.

14. I currently hold my Ordinary Shares in an ISA – can I continue to do so?

Although the AIM Delisting does not directly impact on the ability of a UK shareholder to retain their holding of Ordinary Shares, we understand that some UK ISA operators, particularly those that involve an online share trading account, may insist that the shares held in the ISA must be publicly quoted and may only allow trading in UK companies via low cost online trading facilities.

Please ask your ISA provider as soon as possible to confirm whether they will allow you to continue to hold your Ordinary Shares or whether they are able to convert such Ordinary Shares into and hold Mereo’s Nasdaq-listed ADSs on your behalf. If they do not allow you to continue to hold Ordinary Shares and cannot convert the Ordinary Shares to ADSs on your behalf, you should consult an appropriate professional adviser without delay.

15. I currently hold my Ordinary Shares in a self-Invested personal pension “SIPP” – can I continue to do so?

Although the AIM Delisting does not impact on the ability of a UK shareholder to retain their holding of Ordinary Shares, we understand that some SIPP scheme administrators, particularly those that involve an online share trading account, may insist that the shares held in an individual’s SIPP must be publicly quoted and sometimes only allow trading in UK companies online.

Please ask your SIPP provider as soon as possible to confirm whether they will allow you to continue to hold your Ordinary Shares or whether they are able to convert your holding of Ordinary Shares into ADSs and continue to hold Mereo’s ADSs on your behalf. If they do not allow you to continue to hold Ordinary Shares and cannot convert the Ordinary Shares to ADSs on your behalf, you should consult an appropriate professional adviser without delay.

16. I have lost my original Ordinary Share certificate – how do I get another one in order to progress conversion of my Ordinary Shares to ADSs?

Replacement share certificates are available from Mereo’s registrar, Link Group. Please contact Link Group without delay on 0871 664 0300* or by email to shareholderenquiries@linkgroup.co.uk. Calls cost 12p per minute plus your phone company’s access charge. *Calls outside the United Kingdom will be charged at the applicable international rate. The helpline is open between 09:00 – 17:30, Monday to Friday excluding public holidays in England and Wales.

Link Group will be able to provide you with a replacement share certificate for your Ordinary Shares, although there may be a fee for this. Certain proof of ownership/identification will be required by Link Group prior to issuance of replacement certificates.

Please note that you will not be able to transfer your certificated shares via Link Group, without an original share certificate being received by Link Group with your duly completed block transfer participation request form in Appendix B before the required deadline, being 11.00 a.m. on 4 December 2020.

17. I have further questions that are not dealt with sufficiently here – where can I find further information?

If you hold your Ordinary Shares via a broker, please discuss with your broker in the first instance.

In respect of any queries regarding completion of the block transfer participation request form, a shareholder assistance advice line is being operated by the Company’s registrar, Link Group, which can be accessed by all shareholders on 0371 664 0321. Calls are charged at the standard geographic rate and will vary by provider. Calls from outside the UK. will be charged at the applicable international rate. Lines are open 9.00 a.m. to 5.30 p.m., Monday to Friday, excluding public holidays in England and Wales.

In respect of any queries regarding the conversion of Ordinary Shares to ADSs, please contact the Company’s depositary, Citibank, on +353 1 622 5710. Calls are charged at the applicable international rate and will vary by provider. Lines are open 9.00 a.m. to 5.30 p.m., Monday to Friday local time, excluding public holidays in Ireland.

APPENDICES

The appendices can be found here: