A FTSE SMALL CAP General Counsel and Company Secretary writes...
The latest guidance from the Pre-emption Group (PEG)[ See: http://www.pre-emptiongroup.org.uk/getmedia/963da194-742f-45b2-84d9-d1ee83b786bb/PEG-Template-resolution-for-disapplication-of-pre-emption-rights.pdf.aspx ] basically recommends that if a company is seeking to take advantage of the 10% limit on the exception to pre-emption rights, introduced by the PEG last year, they now do this by means of 2 separate resolutions for 5% each, and PEG have published template resolutions that they recommend companies follow, and which they require for all AGMs after 1 August 2016. If your company is going to seek a 10% exception, rather than 5%, is it going to do so by means of one resolution for 10% or follow the new PEG guidance and use two resolutions (5% plus 5%)?
Just an observation that, like the first posting, we are finalising our notice of AGM soon for an AGM towards the end of July. However, our external law firm has firmly endorsed the need for the two resolution approach. Unlike 2015 where we had a 10% single resolution. We are going to go with our lawyers’ advice and use two resolutions this year.
We have our AGM in the middle of July and will be publishing our Notice of Meeting in the middle of June. At the moment, we intend to continue with a single resolution (as per 2015) rather than adopting the PEG two resolution approach. We have discussed this approach with our external law firm who have endorsed it. However, we continue to monitor the situation to assess the approach being taken by other companies and may re-consider our approach if a majority of companies opt for two resolutions.
We were planning to seek a 10% exception, and were going to do so by means of two resolutions. Given PIRC’s stance in this area and the requirement to pass the disapplication of pre-emption rights resolution as a special resolution, we thought that it would be prudent to reach out to our brokers to try to gauge the likely mood of our shareholders on the issue and potentially contact some of our major shareholders to discuss taking the additional 5% disapplication. Unfortunately this isn’t something which we have the capacity to do before this year’s Notice of AGM is sent out, so we have abandoned the idea of seeking the additional 5% this year.