Companies to be red-topped for not following Pre-emption Group standards

TheĀ Investment Association (formerly the ABI) has published a revised version of its share capital management guidelines.

  • Section 1 (Directors' Power to Allot Shares) has been amended to state that the IA members expect any company seeking a disapplication of pre-emption rights which in aggregate is equal to 10% of the issued capital to follow the model resolutions published by the Pre-emption Group. From 1 August 2016, IVIS will amber top any company seeking such a disapplication of pre-emption rights which does not provide two separate resolutions as set out in the template. From 1 January 2017, IVIS will red top any such company.
  • Section 4 (Issuance of Shares by Investment Trusts) has been amended to clarify that treasury shares should only be re-issued at a discount which is lower than then the weighted average discount (rather than the then average discount) at which all shares held in treasury have been repurchased.

Companies preparing for their AGMs should ensure that their disapplication of pre-emption rights resolutions follow the Pre-emption Group pro forma. Click here for the IA guidelines.