Secondary Share Issues

Question 1

What resolutions are necessary for a secondary share issue?

Answer 1

1. OR to obtain authority to allot

2. SR for disapplication of pre-emption

Question 2

Which types of issue are pre-emptive and non-pre-emptive?

Answer 2

Pre-emptive = rights issue, open offer
Non-pre-emptive = placings

Question 3

Why do pre-emptive types of issue still need to disapply pre-emption rights?

Answer 3

1. Disapply PE rights in relation to overseas shareholders

2. To enable the aggregation of fractional share entitlements

Question 4

Why are placings the least popular? And what is the effect of this?

Answer 4

Non-pre-emptive so going to people who are not existing shareholders. This dilutes the existing shareholdings.

Effect = less authority to grant placings issues under SCM Guidelines and PEG as they want to protect current members

Question 5

Placing - rules on authority to allot/disapplication of PE rights

Answer 5

Authority to allot ⅓ of existing share capital (SCM)

Disapply PE rights - 5% + 5% (acquisition/specified capital investment) (PEG)

Question 6

Rights issue - rules on authority to allot/disapplication of PE rights

Answer 6

Authority to allot ⅔ of existing share capital (SCM)

Disapply PE rights - ⅔

Question 7

Open offer - rules on authority to allot/disapplication of PE rights

Answer 7

Authority to allot ⅓ of existing share capital (SCM)

Disapply PE rights - ⅓