No change to Pre-Emption Group Principles

The Pre-Emption Group has issued a statement confirming that it does not intend to change the pre-emption thresholds set out in its 2015 Statement of Principles following the Prospectus Regulation coming into force on 20 July 2017.

The Principles allow for two resolutions for a general disapplication of pre-emption rights in respect of:

• the issue of up to 5%of the company's issued ordinary share capital on an unrestricted basis; and
• an additional 5% of the company's issued ordinary share capital provided it is used only in connection with an acquisition or specified capital investment which is announced at the same time as the issue, or which has taken place in the preceding six-month period and is disclosed in the announcement of the issue.

One of the immediate changes made by the Prospectus Regulation was that an issuer with securities admitted to trading on a regulated market may admit further securities, without a prospectus, as long as the securities represent less than 20% of the same class of security. This figure must be calculated over a 12 month period. Previously, the threshold was 10%.

As expected, The Pre-Emption Group will keep to the overall threshold of 10% for a disapplication of pre-emption rights set out in the Principles. Therefore, the increased ability to admit securities to trading without a prospectus is likely to be most relevant in the context of consideration shares issued in M&A processes.