Rights issues

Reduction in subscription times

The government has accepted the recommendations of a working party made up of the Financial Services Authority (FSA) and the Treasury to make rights issues quicker and simpler.

Alistair Darling, the Chancellor, said rights issues could be shortened to as little as 16 days from the 39 days they can currently take. The Chancellor set up a group, headed by Hector Sants, chief executive of the FSA, and Kitty Ussher, economic secretary to the Treasury, in July last year, to look at ways to make rights issues easier.
The move came after several large companies, including HBOS and Royal Bank of Scotland, struggled to get their rights issues away.

The group have published their recommendations,
and called for a reduction in the time given to subscribe
for a rights issue from 21 to 14 days. The group suggested a new type of open offer, which could provide compensation to shareholders who do not take up their rights.

In the longer term, the group suggested that the Prospectus Directive could be amended so that companies would not have to issue a full prospectus with every rights issue.

 esmartmoney
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