Rights Issues – What To Consider If Control May Pass

The Takeovers Panel has provided some clarity for issuers, underwriters and shareholders where a rights issue may have an impact on control.

However, the Takeovers Panel has not provided a black letter safe harbour from declarations of unacceptable circumstances being made, where rights issues are challenged by aggrieved shareholders.

The Panel has also expressly stated that where there is a clear need for funds that has not been contrived, and in the absence of other issues, a rights issue resulting in a control effect will generally not be unacceptable. This is provided that the rights issue is structured appropriately and an appropriate dispersion strategy has been put in place.