I have been asked by DTI Science and Innovation Minister, Lord Sainsbury, to examine whether the application of pre-emption rights when new shares are issued may hinder certain public companies from raising finance flexibly for innovation and growth and, as far as there are problems, to recommend possible solutions. I aim to report back to the DTI early in the New Year.
The study follows on from representations, primarily from the biotechnology industry, that current application of pre-emption rights in the UK makes it difficult and expensive for companies to finance research and product development.
The rules for pre-emption rights for public companies are set out in part in the European Second Company Law Directive. This study is particularly timely because the European Commission has just published proposals for some immediate minor technical revisions to the directive (including on pre-emption rights) and is also planning to conduct a more thorough review of the whole area in the next couple of years.
