Informal flexible guidelines are an appropriate mechanism of signalling to companies what institutional shareholders regard as sensitive levels of nonpre- emptive issues
The willingness of investor bodies to give rapid guidance to companies on their reaction to proposals outside the guidelines is important for companies and helps make real the flexibility implied by “guidelines”. The alternative, discussions with individual shareholders, which can be more difficult to achieve, always remains available.
The Pre-Emption Group has in the past provided and can still provide a suitable forum for consideration of general changes to the guidelines, bringing together as it does representatives of investor bodies, issuers (among which is the ACT), and of intermediary banks under the chairmanship of the Chairman of the Securities Institute. A note on the background of the Pre-Emption Group is provided in the Appendix, page 13.
Pre-emption rights go to the heart of the position of shareholders as (fractional) owners of companies. To undermine them would move more towards precedence of a managerial system with full control in the hands of an intendant management. Such a move should not be made lightly.
