In the summer of 2008, the Rights Issue Review Group (RIRG) was set up by the Chancellor of the Exchequer. The RIRG was set up to examine and report to the Chancellor on measures which could be taken to make equity raising more efficient and orderly. In November 2008, the RIRG published a report where it recommended changes to UK company law, market practice and to the FSA’s regulatory requirements. Three of the changes recommended by the RIRG require FSA consultation and these relate to:
- Reducing the minimum rights issue subscription period.
- Making ‘open offers with compensation’ available.
- Amending document vetting fees in relation to equity shelf registration.
On 12 January 2009, the FSA consulted on reducing the minimum rights issue subscription period in Consultation Paper 09/4: Rights issue subscription periods (CP09/4).
The FSA has now published Policy Statement 09/2: Rights issue subscription periods - Feedback on CP09/4 and final rules (PS09/02). In PS09/2, the FSA states that it has decided to reduce the Listing Rules’ minimum rights issue subscription period to ten business days. This is a minimum duration and issuers and their advisers are free to conduct their rights issues over a longer period as they see fit.
In addition to changing Listing Rule 9.5.6 R, the FSA is making consequential amendments to LR 9.5.15(2)(h) R and LR 14.3.9(2)(g) R, which also relate to the duration of rights issue subscription periods. As part of the review of the structure of the listing regime, the FSA will consider the appropriateness of the latter rule applying to overseas companies as well as to UK companies.
The rule changes came into effect on 10 February 2009. The FSA will consult at a later date on compensatory open offers, and a small change to document vetting fees in relation to equity shelf registration.