Britain is extending an easing of cash call rules to help UK-listed companies raise vital funds during a COVID-19 induced economic slump.
The Pre-Emption Group (PEG) of finance organisations, which issues guidance on rights issues and fundraisings, said on Friday it would extend the easing of its guidelines by a further two months to Nov. 30.
Under normal “pre-emption” rights best practice, companies can raise up to 10% of their share capital without obtaining shareholder permission, but under eased guidelines this has been doubled to 20%.
Since the measure was introduced on April 1, British companies have raised 23.7 billion pounds ($31.5 billion) in the UK market and 125 of the issuances have been to raise funds urgently needed to weather the coronavirus crisis, PEG said.
This dash for emergency cash by British companies provoked some backlash from investors earlier in the year, though many remained largely supportive.
PEG said it had decided on the extension to allow a raft of expected equity offerings during the third quarter – traditionally a busy time for share placings as investors come back from their summer breaks – to take advantage.
“We have chosen 30th November to allow companies more time to assess any unforeseen consequences of COVID-19-related financial and cashflow developments,” PEG said in a statement.
PEG is based at Britain’s Financial Reporting Council, which regulates company auditors and governance.
