On 12 March 2015, the Pre-Emption Group published a revised statement of principles for the disapplication of the UK's statutory pre-emption rights. The principles are not strict rules but rather are intended to provide guidance to companies and shareholders on the factors to take into account when considering whether to disapply pre-emption rights. The key changes to the last version of the principles are set out below.
- The new guidelines clarify that the Statement applies to both UK and non-UK incorporated companies with a Premium Listing. In addition, companies with a Standard Listing or which are listed on Alternative Investment Market or the High Growth Segment of the Main Market of the London Stock Exchange are encouraged to adopt the principles.
- The Statement has also been amended to clarify that the principles apply to all issues of equity securities that are undertaken to raise cash for the issuer or its subsidiaries, irrespective of the legal form of the transaction. This means that "cashbox" transactions, although falling outside the statutory pre-emption regime, should be regarded as being issues of equity securities for cash for the purposes of the Statement.
- The guidelines retain the principle that shares should not be issued for cash on a non-pre-emptive basis at a discount of more than 5% of the prevailing market price but clarify how this should be calculated and in particular that the company's expenses (including fees and commissions) in connection with the issue need to be included in the calculation.
- Companies are now permitted to seek authority by special resolution to undertake non-pre-emptive issues of equity securities to finance expansion opportunities. A company may seek to issue non-pre-emptively for cash up to 5% of its issued ordinary share capital in any one-year period in connection with an acquisition or specified capital investment. The company would be required to confirm this in the circular for the annual general meeting at which such additional authority is to be sought. This is in addition to its ability to seek authority for a non-pre-emptive issue of up to 5% of its issued ordinary share capital for purposes other than a specified capital investment.
The Statement is available here: http://www.pre-emptiongroup.org.uk/getmedia/655a6ec5-fecc-47e4-80a0-7aea04433421/Revised-PEG-Statement-of-Principles 2015.pdf.aspx.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.