UK Secondary Capital Raising Review
The UK Secondary Capital Raising Review, led by Mark Austin, was launched on 12 October 2021 to look into improving further capital raising processes for publicly traded companies in the UK.
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On 12 October 2021, the Treasury appointed Mark Austin as independent chair of the UK Secondary Capital Raising Review, tasked with making recommendation on how further capital raising processes by companies that are already listed could be made more efficient.
Mr Austin published the outcome of his review on 19 July 2022, making a series of recommendations to the Government, Financial Conduct Authority (FCA) and the Pre-Emption Group (PEG). His key recommendations included:
- Protecting the rights of existing shareholders by maintaining and enhancing the UK pre-emption regime.
- Reducing regulatory involvement in fundraisings, including by raising the threshold at which a prospectus should be required for a further issuance, removing the requirement for a sponsor to be appointed by an issuer, and reconsidering the FCA’s approach to working capital statements.
- Making existing fundraising structures quicker and cheaper by making changes to the Companies Act.
- Increasing the range of choice of fundraising structures for companies, including by replicating the key principles and structure of Australian offer processes for smaller fundraisings.
- Establishing the Digitisation Taskforce to drive forward the modernisation of the UK’s shareholding framework.
The Chancellor has accepted all the recommendations made to the Government, and has appointed Sir Douglas Flint to chair a new Taskforce to consider the digitisation of shareholdings.
Alongside this, the FCA and PEG have both published statements welcoming Mr Austin’s report.
UK Secondary Capital Raising Review (12 October 2021)
Lord Hill’s UK Listing Review made a series of recommendations to the Government to help boost the UK as a destination for IPOs and optimise the capital raising process for large and small companies on UK markets. One of those recommendations was to bring together an expert group to look into how further capital raising processes by companies that are already listed can be made more efficient.
On 12 October, the Chancellor announced that Mark Austin would take on the role as the independent chair of the UK Secondary Capital Raising Review, to look into these issues and to make recommendations to the Government.
Mr Austin is a partner at the law firm Freshfields Bruckhaus Deringer. He is also chair of the FCA’s Listing Authority Advisory Panel.
Mr Austin is asked specifically to consider:
- Whether the overall duration of the secondary capital raising process can be reduced including, in relation to rights issues, by reducing the period during which shareholders trade their rights.
- Whether new technology can be brought to bear on the process in order to ensure shareholders can receive relevant information rapidly and exercise their rights.
- Other fund-raising mechanisms that may be worth considering in the UK, including the Australian ‘RAPIDS’ model as well as structures to facilitate enhanced retail investor participation in capital raisings. It should also consider what barriers, if any, there are to wider adoption.
- Whether the greater transparency around short selling brought in after the financial crisis has benefited the rights issue process (noting the contribution short selling makes to price formation) and whether more can be done.
- Whether there are any other ways of improving the capital raising process by UK publicly traded companies which are consistent with the UK’s commitment to high standards.
- Whether any outstanding recommendations from the 2008 ‘Rights Issue Review Group’ should be pursued.
The Chancellor has asked Mr Austin to report back with his recommendations in the spring of 2022.
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Last updated 19 July 2022 + show all updates
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