Relaxing of rules may lead to “a slew” of new rights issues
Companies will be able to issues shares worth up to two-thirds of the company’s value without shareholder approval, up from one-third, after the Association of British Insurers (ABI) changed its guidelines.
"We need to make the process quicker so companies do not remain exposed to speculative pressures for a long time while carrying out rights issues," The FT quotes Peter Montagnon, the ABI's director of investment affairs.
The FT said several large UK companies, including HBOS, saw their share prices fall rapidly while they looked to raise money through issuing shares, as speculators bet on the outcome of those processes.
The ABI hoped its new guidelines would stop such speculation.
The Independent suggested the relaxing of the rules would lead to “a slew of rights issues”.
The measures were discussed and agreed by the Rights Issue Review Group, which was set up by the Treasury and made its recommendations at the end of November.
The ABI was not available this morning.
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