Nicholas Pettifer
Staff writer
Last month IFLR argued that the Association of British Insurers' (ABI) guidelines for cash placings in the UK were too restrictive. At the moment, placings worth over 5% of the issuer's share capital require shareholder approval via a special resolution. Almost 90% of the lawyers interviewed for this Big Question agree that companies need more flexibility. The ABI should re-examine pre-emption rights and, even if only temporarily, increase the percentage that companies can raise privately.
Two-thirds of the respondents feel that 10% is a sensible revised figure. This is principally for two reasons. First, with valuations so low at the moment, it will allow companies to quickly raise sufficient funds to strengthen their balance sheets and reduce their gearing. Where appropriate, it also allows for expansion of the company via acquisition or internal investment (though this is a less likely reason at the moment.)
Second, and more...