The Myners report has confirmed that pre-emption rights in the UK should continue to exist to protect shareholders from dilution in the value of their investments. However, in the US companies can issue up to 20% of equity share capital on a non-pre-emptive basis. Myners concluded that the two systems can successfully co-exist because in the US there is a greater potential for legal action against Directors if shares are issued at under value. The pre-emption guidelines are sometimes seen as too restrictive for smaller or early stage businesses. As a result the DTI and FSA are looking at simplifying the paperwork and shortening the capital raising process.
