Pre-emption Group Statement of Principles
In November 2022, the Pre-Emption Group published a revised Statement of Principles for the disapplication of pre-emption rights, alongside new template resolutions. The revised Statement allows companies to seek disapplications of up to 10% for their general authority and an additional 10% for acquisitions and specified capital investments, with a further authority of up to 2% of issued ordinary share capital in each case to be used for a "follow-on" offer. For further information, see our Briefing.
These new template resolutions are supported by both Glass Lewis and ISS, and the Investment Association's Share Capital Management Guidelines have also been updated to reflect the revised thresholds. While it is still early in the 2023 AGM season,
While it is still early in the 2023 AGM season, we expect a majority of companies to follow the new Guidelines, but some companies may choose a hybrid going forwards (i.e. still seeking 5% for each resolution, but including a "follow-on" offer). When deciding which approach to take, companies should be mindful of their shareholder base and any specific voting guidelines their institutional investors have in place. The approach taken by FTSE 350 companies who have published their AGM notices since mid-December is set out below.
As recommended by the Secondary Capital Raising Review, the updated Share Capital Management Guidelines still regard as routine an authority to allot up to two-thirds of a company's existing issued share capital, but now extend the application of the second one-third authority to all fully pre-emptive offers, not just rights issues as was previously the case.