On January 12, the UK Financial Services Authority (FSA) proposed the reduction of the minimum subscription period for companies undertaking a rights issue to either 14 calendar days or 10 business days. The FSA stated that this measure could help make equity raising more efficient and orderly. The current minimum subscription period is 21 calendar days.
During a rights issue subscription period, existing shareholders of a company may buy new shares in proportion to their existing holdings and these rights can also be bought and sold in the market. The proposed rule change will only apply to the minimum subscription period.
The proposals follow recommendations made by the Rights Issue Review Group report to the UK Chancellor of the Exchequer on November 24, 2008. The Rights Issue Review Group was co-chaired by the FSA and the UK Treasury.
The consultation closes on January 26, and the FSA is planning for the changes to take effect at the beginning of February.