The UK’s FSA has moved swiftly to address the market’s concerns about rights issues timetable problems. Until mid-February 2009 the Listing Rules’ required a 21 day subscription period; this has now been reduced to 10 business days.
The new subscription is a minimum subscription period and applies only to non-statutory rights issues (i.e. where the statutory pre-emption rights of the Companies Act 1985 have been disapplied). Any issuer wishing to have a longer subscription period can do so. Initial consultations had suggested a reduction from 21 days to 14 days, in line with typical EGM procedures, however 10 business days was finally agreed to avoid problems with public holidays and operating issues with CREST, the UK’s electronic clearing and settlement system. The new timetable is also in line with the London Stock Exchange’s timetable for open offers which uses business days.
During the Summer of 2008 both HBOS and Bradford & Bingley were exposed to considerable share price volatility during their lenghty fund raising. The Treasury subsequently commissioned the Rights Issue Review Group to propose changes to minimse future problems; the new Listing Rules reflec t their recommendations.