Additional flexibility on non-pre-emptive issuances to end on 30 November 2020

News types: Operating Procedures, Policies and Responsibilities, Policy Statements, Statements

Published: 20 November 2020

Statement issued on behalf of the Pre-Emption Group

The Pre-Emption Group’s (PEG) recommendation for investors to apply additional flexibility in considering issuances of shares on a non-pre-emptive basis will come to an end on 30 November. This additional flexibility, which has been well received in the market, was first recommended in March and subsequently extended to the end of November.

Market activity over the past eight months has shown that investors were clearly in favour of companies having access to the capital they needed quickly to maintain their solvency during this unprecedented economic downturn. Companies have responded responsibly to the additional flexibility and generally recognised the recommendations of the PEG statements.

Whilst considerable uncertainty remains, companies have had eight months to assess their situation and respond accordingly. From 1 December this year we will revert to the requirement for full pre-emption except in specific circumstances as outlined in the Statement of Principles . Non-pre-emptive issuances should be undertaken only when effective consultation has been conducted. The PEG encourages companies to consult the statements made in April and September to understand what constitutes such proper consultation.

Many aspects of the market have worked well over 2020, particularly the speed and access to the equity capital companies have required. However, the PEG and the market participants it represents remain committed to the principles of pre-emption, and these rights need to continue to be respected to protect all shareholders.

The PEG looks forward to gathering insights and suggestions to feed into Lord Hill’s review, and more widely, regarding possible enhancements to current equity market structures to make them more effective and competitive in the future.