The Pre-Emption Group (PEG) has issued updated guidance for UK listed companies seeking to issue shares for cash without regard to shareholders’ rights of first refusal. The PEG’s new Statement of Principles and Template Resolutions will help listed companies needing to raise equity capital without a full public offer by raising current limits. Companies are also encouraged to enable some participation by retail shareholders in cash placings.
For more information, and a summary of the differences between the latest 2022 guidance and the previous version, see our briefing.
Key points
Non-pre-emptive limits increased – The PEG’s guidance previously imposed a limit of 5% of existing share capital for general disapplications of pre-emption rights, with an additional 5% permitted to finance an acquisition or specified capital investment. In 2020, during the Covid-19 pandemic, the PEG temporarily increased each of these limits to 10%. The new guidance reinstates these increases on a permanent basis and gives added flexibility.
Enabling retail participation – “Follow-on” offers can be made to existing shareholders as part of a non-pre-emptive capital raise, up to a limit of £30,000 per beneficial owner and with such shares not exceeding 20% of those issued in the placing. The price should be equal to, or less than, that of the placing shares.
Companies requiring additional capital – “Capital hungry” companies can exceed the usual limits, as long as this has been clearly disclosed to investors when a general authority is requested or pre-IPO.
Required procedures – Companies making non pre-emptive issues should consult major shareholders in advance (to the extent possible and permitted) and also consider “soft” pre-emption and how to involve retail and other excluded investors. In addition, they should explain why they are seeking additional funds and what they will do with them, as well as making and publishing a post-transaction report on their activities.
Transitional provisions – While many companies will have existing 10% (5% plus 5%) authorities, shareholders may, on a case-by-case basis, support placings above this level before resolutions with the new limits are passed at the next AGM. Pending amendments to the prospectus regime, companies will not be expected to make offers to retail investors where doing so would trigger the requirement for a prospectus.
For further information, please contact:
John Lane, Partner, Linklaters
john.lane@linklaters.com
