Pre-Emption Group: Expectations for disapplication thresholds

When the Prospectus Regulation came into force in July 2017, it introduced a new exemption from the requirement to publish a prospectus up to a 20% increase in securities admitted to trading. (The previous exemption threshold under the Prospectus Directive was 10%). In light of this new threshold, the Pre-Emption Group confirmed that it did not intend to make any change to the flexibility permitted by the 2015 Statement of Principles - Disapplying pre-emption rights. The Statement of Principles allows for two resolutions for disapplication authority - the first 5% for general corporate purposes and, when applied for, the second 5% for use only in connection with an acquisition or specified capital investment.

In its latest statement, the Pre-Emption Group confirms that whilst decisions about specific placings are a matter for individual shareholders, the Statement of Principles reflects a generally agreed position supported by the Investment Association and Pensions and Lifetime Savings Association. To assist in a constructive discussion between companies and shareholders, companies should be mindful of the expectations included within the Statement of Principles. Companies are also encouraged to use the template resolutions and Appendix of Best Practice in Engagement and Disclosure when applying for authority to disapply pre-emption rights and issuing shares under that authority.