Pre-Emption Group reports widespread adoption of new principles

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Published: 5 March 2024

On behalf of the Pre-Emption Group

The Pre-Emption Group (PEG) has today published its first report monitoring the use of its updated Statement of Principles on the disapplication of pre-emption rights for UK listed companies.

Pre-emption rights give existing shareholders of a company priority to participate in future share issues, protecting their ownership stakes from being diluted. UK companies can seek authority from shareholders to disapply these rights through special resolutions at general meetings.

In line with the recommendations set out in the UK Secondary Capital Raising Review, the PEG's 2022 Statement of Principles increased the level of disapplication authority that companies can request routinely to 20%.

Key findings from the report covering annual general meetings from November 2022 to July 2023 include:

  • 55.7% of FTSE 350 companies with an AGM during the study period sought enhanced disapplication authority allowed under the new Principles.
  • 65.7% requested authority for a specified capital investment, in addition to general corporate purposes.
  • 98.3% had all disapplication resolutions passed by shareholders, with only a small number seeing significant dissent.

We are pleased to see widespread adoption of the updated guidance by companies, alongside broad shareholder support for disapplication authority requests. Successful adoption of the revised regime is a crucial step forward in making fundraising structures quicker and cheaper, key objectives of the UK Secondary Capital Raising Review which aims to enhance the competitiveness of the UK market.

Sir Keith Skeoch, PEG Chair

To enhance the transparency of shareholder disclosures, companies are reminded that under the new Principles they should send a post-transaction report to the PEG upon completion of a capital raising in which they have utilised disapplication authority. Post-transaction reports should follow the template in Part 2B of the Principles and they should be sent to [email protected].

The PEG will continue monitoring usage and engaging with stakeholders on the revised Principles.

View the report

Listen to our accompanying In Conversation podcast episode featuring Sir Keith Skeoch, Chair of the Pre-Emption Group and Stephanie Blenko, Senior Policy Associate in the Stewardship team at the FRC.