Revised statement of principles for the disapplication of pre-emption rights

On 12thMarch 2015, the Pre-Emption Group published a statement on the factors for companies and shareholders to take into account when considering disapplying pre- emption rights.

The statement emphasises that whilst not undermining the importance of pre- emption rights, a degree of flexibility is appropriate in circumstances where issuance of equity securities on a non- pre-emptive basis would be in the interests of companies and their owners.

The last statement was published in 2008, and the principle changes include:

  • Part 2A paragraph 3 introduces the option for a company to seek authority to issue non- pre- emptively for cash up to an additional 5% of the issued ordinary share capital in 2 circumstances:
  • Clarification that the statement applies to all issues of equity securities that aim to raise cash for the issuer or its subsidiaries, regardless of the legal form of the transaction;
  • Clarification that the statement applies to both UK and non- UK incorporated companies whose shares are admitted to the premium segment of the Official List. All other companies whose shares are not on the premium segment are encouraged to adopt the statement;
  1. in any one year, whether or not in connection with an acquisition or specified capital investment; or
  2. provided that the company confirms in the circular for the Annual General Meeting that it intends to use the cash only in connection with an acquisition or specified capital investment which is announced in conjunction with the issue or in the preceding 6 month period and is disclosed in the announcement of the issue.
  • Any discount at which equity is issued for cash should be disclosed by the company in the announcement of the pricing of the relevant issue. Guidance on the calculation of these discounts is provided in the Appendix of the statement.