Companies will be able to issue new shares worth up to two-thirds of their existing capital without holding an extraordinary shareholder meeting under fresh ABI guidelines issued today.
The Association says the change is part of its bid to speed up the rights issue process and make it easier for companies to launch issues at a discount. The previous limit was one-third of shares.
It says it also meets recommendations made by the Treasury-led Rights Issue Review Group.
However, the guidance also requires all board members of a company to stand for re-election at the next AGM unless the additional 'headroom' involves the issuance being lower than one-third of the company's value.
"We are very pleased to make this contribution to the work of the Review Group," ABI director of investment affairs Peter Montagnon says.
"ABI members fully support the need to speed up the rights issue process where possible, providing the vital principle of pre-emption is respected. We look forward to helping develop the other recommendations agreed by the Group."
Matthew Fell, CBI director of company affairs, adds: "Moves to simplify the capital-raising process are welcome, particularly when markets are nervous at this time of heightened economic uncertainty."
Companies wishing to avail themselves to the new headroom should seek shareholder approval for the two-thirds limit at their annual meetings this spring if needed, the ABI adds.
The guidance will be reviewed after three years. In the meantime the ABI says it will monitor the use by companies of the additional 'headroom'.
The full guidance can be accessed here.IFAonline
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