An introduction to equity capital - Revision history

imported>Doug Williamson: Categorise.

2018-02-22T12:42:05Z

Categorise.

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	[[Category:Book_Export]]		[[Category:Book_Export]]
			[[Category:Corporate_financial_management]]

imported>Jeeten.patel@thinkpublishing.co.uk at 13:48, 19 October 2015

2015-10-19T13:48:02Z

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	Additionally, the 2015 Statement seeks to further restrict the discount at which a listed company may issue equity securities for cash other than to shareholders, to a maximum of 5% of the middle market price immediately prior to the pricing ~~issue~~ of the issue.		Additionally, the 2015 Statement seeks to further restrict the discount at which a listed company may issue equity securities for cash other than to shareholders, to a maximum of 5% of the middle market price immediately prior to the pricing of the issue.

imported>Jeeten.patel@thinkpublishing.co.uk at 13:47, 19 October 2015

2015-10-19T13:47:22Z

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	Subject to obtaining the necessary shareholder consent, a company is permitted to disapply the statutory pre-emption provisions. However, listed companies are further restricted in their ability to disapply pre-emption rights by the guidelines issued by the ~~various Investor Protection Committees (“Pre~~-Emption Group ~~Guidelines”~~).		Subject to obtaining the necessary shareholder consent, a company is permitted to disapply the statutory pre-emption provisions. However, listed companies are further restricted in their ability to disapply pre-emption rights by the guidelines issued by the Pre-Emption Group which represents the institutional investor community. In March 2015, the Pre-Emption Group published an updated Statement of Principles (the 2015 Statement) which sets out the Group's views on the disapplication of pre-emption rights by premium listed companies and issues of shares for cash on a non pre-emptive basis.

			The general principle is that a listed company's annual resolution to disapply statutory pre-emption rights should be restricted to an amount of equity securities not exceeding 5% of the current issued ordinary share capital. The 2015 Statement introduces a new flexibility which enables companies to seek a disapplication for up to a further 5% of issued ordinary share capital for use in connection with either an acquisition or a specified capital investment. In the AGM circular at which this additional flexibility is sought, the company should make clear its intention to use the additional 5% only in connection with an acquisition or specified capital investment which is either announced contemporaneously with the issue or which has taken place in the preceeding six-month period and is disclosed in the announcement of the issue.

	In particular, the Pre-Emption Group Guidelines recommend that a listed company’s annual resolution to disapply statutory pre-emption rights should be restricted to an amount of equity securities not exceeding 5% of the current issued ordinary share capital. The ~~guidelines~~ also ~~seek~~ to restrict the total number of equity securities issued for cash on a non pre-emptive basis in any rolling three-year period to 7.5% of issued ordinary share capital.
			The 2015 Statement also seeks to restrict the total number of equity securities issued for cash on a non pre-emptive basis in any rolling three-year period to 7.5% of issued ordinary share capital.


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	Additionally, the ~~Pre-Emption Group Guidelines seek~~ to further restrict the discount at which a listed company may issue equity securities for cash other than to shareholders to a maximum of 5% of the middle ~~of the best bid and offer prices~~ immediately prior to the ~~announcement~~ of ~~an issue or proposed~~ issue.		Additionally, the 2015 Statement seeks to further restrict the discount at which a listed company may issue equity securities for cash other than to shareholders, to a maximum of 5% of the middle market price immediately prior to the pricing issue of the issue.

imported>Jeeten.patel@thinkpublishing.co.uk at 11:53, 19 October 2015

2015-10-19T11:53:23Z

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	A listed company will usually have the rights issue underwritten in order to ensure certainty of funds (see “Underwriting” below for further details). An alternative to this is however to offer the shares at a deep discount to market price (e.g. 40% to 50%) to achieve a similar effect. More usually however, even where companies have launched deeply discounted rights issues they are also underwritten. To reduce underwriting expenses, a company may seek irrevocable undertakings from some of its larger shareholders to take up their entitlement to shares under the rights offer, thereby reducing the number of shares which are required to be underwritten.		A listed company will usually have the rights issue underwritten in order to ensure certainty of funds (see “Underwriting” below for further details). An alternative to this is however to offer the shares at a deep discount to market price (e.g. 40% to 50%) to achieve a similar effect. More usually however, even where companies have launched deeply discounted rights issues they are also underwritten. To reduce underwriting expenses, a company may seek irrevocable undertakings from some of its larger shareholders to take up their entitlement to shares under the rights offer, thereby reducing the number of shares which are required to be underwritten.

			Rights issues have historically been associated with fund raising in challenging conditions and the financial crisis in 2008/2009 saw a significant peak in rights issues as companies sought to raise funds to pay down debt. After 2009, the number of rights issues declined but since 2012, they have become increasingly common, with 2014 seeing double the number of rights issues that took place in 2013, with over half of those undertaken in 2014 being to raise cash to fund an acquisition. By way of example, the largest rights issue in 2014 was that undertaken by Babcock International Group plc, which raised £1.1bn in order to part fund the acquisition of Avincis.

	* Theoretical ex-rights share price and value of a right – as mentioned above, a rights issue gives existing shareholders the right (but not the obligation) to purchase a number of new shares calculated by reference to an existing holding at a given price (the issue price). For example, a one-for-four rights issue at £10 gives the shareholder the right to purchase one new share at a price of £10 for every four shares already held. A share that has the right to purchase the new shares attached is known as a cum-rights share. When the rights are admitted to listing and trading they are effectively detached from the existing ordinary shares as they may be traded separately. As such, the existing ordinary shares are marked ‘ex’ by the London Stock Exchange, reflecting that those shares are then traded ex-rights.		* Theoretical ex-rights share price and value of a right – as mentioned above, a rights issue gives existing shareholders the right (but not the obligation) to purchase a number of new shares calculated by reference to an existing holding at a given price (the issue price). For example, a one-for-four rights issue at £10 gives the shareholder the right to purchase one new share at a price of £10 for every four shares already held. A share that has the right to purchase the new shares attached is known as a cum-rights share. When the rights are admitted to listing and trading they are effectively detached from the existing ordinary shares as they may be traded separately. As such, the existing ordinary shares are marked ‘ex’ by the London Stock Exchange, reflecting that those shares are then traded ex-rights.

imported>Doug Williamson: Protected "An introduction to equity capital" (‎[edit=sysop] (indefinite) ‎[move=sysop] (indefinite))

2015-07-27T12:57:27Z

Protected "An introduction to equity capital" (‎[edit=sysop] (indefinite) ‎[move=sysop] (indefinite))

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Revision as of 12:57, 27 July 2015

imported>Jeeten.patel@thinkpublishing.co.uk at 11:19, 24 November 2014

2014-11-24T11:19:30Z

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	* issuer call (often referred to as a “soft call”) – allowing the issuer to redeem the bonds at a fixed price at a future date if the market price of the underlying shares exceed the initial conversion price (usually by 130% to 140%) over a specified period thereby forcing holders to convert/exchange and realise the appreciation in the share price; and		* issuer call (often referred to as a “soft call”) – allowing the issuer to redeem the bonds at a fixed price at a future date if the market price of the underlying shares exceed the initial conversion price (usually by 130% to 140%) over a specified period thereby forcing holders to convert/exchange and realise the appreciation in the share price; and
	* bondholder put – allowing the holder to choose to have the bonds redeemed at a pre-determined level at a fixed future date. The put price is typically at a premium so that, on exercise, the holder will receive a yield equivalent to a straight bond issued by that company.		* bondholder put – allowing the holder to choose to have the bonds redeemed at a pre-determined level at a fixed future date. The put price is typically at a premium so that, on exercise, the holder will receive a yield equivalent to a straight bond issued by that company.


	===Warrants===		===Warrants===

imported>Jeeten.patel@thinkpublishing.co.uk at 11:15, 24 November 2014

2014-11-24T11:15:52Z

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imported>Jeeten.patel@thinkpublishing.co.uk at 16:46, 1 November 2014

2014-11-01T16:46:11Z

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	There are various way in which a company may raise equity finance. In the UK, the most common means by which a listed company may raise equity finance are by way of a rights issue, open offer or placing of shares. The first two methods are pre-emptive in nature and ensure that existing shareholders, should they chose to participate in the offer, are able to maintain their pro rata holding of shares in the company. A placing of shares is a non pre-emptive offer of shares. The shares may be offered to selected existing shareholders or new investors may be targeted by a company. A company may chose to utilise more than one of these methods at the same time and could, for example, combine a rights issue or an open offer with a placing of equity shares. The key features of these types of share offers are discussed below.		There are various way in which a company may raise equity finance. In the UK, the most common means by which a listed company may raise equity finance are by way of a rights issue, open offer or placing of shares. The first two methods are pre-emptive in nature and ensure that existing shareholders, should they chose to participate in the offer, are able to maintain their pro rata holding of shares in the company. A placing of shares is a non pre-emptive offer of shares. The shares may be offered to selected existing shareholders or new investors may be targeted by a company. A company may chose to utilise more than one of these methods at the same time and could, for example, combine a rights issue or an open offer with a placing of equity shares. The key features of these types of share offers are discussed below.

	===Rights issues===		{\| border="2" cellpadding="5" cellspacing="0" class="infotable" style="margin-left: auto; margin-right: 0px; background:#fff;"
			\|-
			! style="color:#48001f; font-size:18px; background:none; text-align:left;" \| '''Rights issues'''
			\|-
			\| style="background:#f2ebef; border-left:0px; border-right:0px; border-bottom:0px"\|
	* General – a rights issue is an offer to existing shareholders to subscribe in cash for new shares or other securities in a company, pro rata to their existing holdings. The offer is made by the issue to existing shareholders of nil paid rights to subscribe for shares. These nil paid rights are tradeable during the offer period. At the end of the offer period, to the extent shareholders have not taken up their rights or have renounced them in favour of a purchaser (who has subsequently paid the subscription price), the rights will lapse. A company will usually engage an investment bank to underwrite the rights offer. The bank will attempt to find subscribers in the market for the new shares to which those lapsed rights relate or failing which, will take up the new shares itself.		* General – a rights issue is an offer to existing shareholders to subscribe in cash for new shares or other securities in a company, pro rata to their existing holdings. The offer is made by the issue to existing shareholders of nil paid rights to subscribe for shares. These nil paid rights are tradeable during the offer period. At the end of the offer period, to the extent shareholders have not taken up their rights or have renounced them in favour of a purchaser (who has subsequently paid the subscription price), the rights will lapse. A company will usually engage an investment bank to underwrite the rights offer. The bank will attempt to find subscribers in the market for the new shares to which those lapsed rights relate or failing which, will take up the new shares itself.
			\|}

	Any premium over the offer price obtained in the market will be paid (net of expenses) to the shareholder who was originally offered, but declined, the new shares or to the person to whom that shareholder renounced his/her rights. The price of the shares or other securities to be issued pursuant to the rights will be set at a discount to market value in order to assist take-up (see “Theoretical ex-rights share price and value of a right” below).		Any premium over the offer price obtained in the market will be paid (net of expenses) to the shareholder who was originally offered, but declined, the new shares or to the person to whom that shareholder renounced his/her rights. The price of the shares or other securities to be issued pursuant to the rights will be set at a discount to market value in order to assist take-up (see “Theoretical ex-rights share price and value of a right” below).
	A listed company will usually have the rights issue underwritten in order to ensure certainty of funds (see “Underwriting” below for further details). An alternative to this is however to offer the shares at a deep discount to market price (e.g. 40% to 50%) to achieve a similar effect. More usually however, even where companies have launched deeply discounted rights issues they are also underwritten. To reduce underwriting expenses, a company may seek irrevocable undertakings from some of its larger shareholders to take up their entitlement to shares under the rights offer, thereby reducing the number of shares which are required to be underwritten.		A listed company will usually have the rights issue underwritten in order to ensure certainty of funds (see “Underwriting” below for further details). An alternative to this is however to offer the shares at a deep discount to market price (e.g. 40% to 50%) to achieve a similar effect. More usually however, even where companies have launched deeply discounted rights issues they are also underwritten. To reduce underwriting expenses, a company may seek irrevocable undertakings from some of its larger shareholders to take up their entitlement to shares under the rights offer, thereby reducing the number of shares which are required to be underwritten.

imported>Jeeten.patel@thinkpublishing.co.uk at 16:38, 1 November 2014

2014-11-01T16:38:03Z

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	This article provides an overview of the key features of equity financing in a general context. For detail on equity financing in specific jurisdictions, please refer to the relevant Country Guides.		This article provides an overview of the key features of equity financing in a general context. For detail on equity financing in specific jurisdictions, please refer to the relevant Country Guides.

	Equity capital		==Equity capital==
	A company’s equity capital is that part of its capital which reflects the residual value of its assets after taking account of all third party liabilities. The equity capital in a company in liquidation is the property of the holders of ordinary shares hence these shares are often referred to as equities.		A company’s equity capital is that part of its capital which reflects the residual value of its assets after taking account of all third party liabilities. The equity capital in a company in liquidation is the property of the holders of ordinary shares hence these shares are often referred to as equities.
	Equity shareholders have a right to share in the profits of the company or any surplus assets on winding up. In accordance with legislation and accounting standards, shares in a company’s share capital may usually be either equity shares or non-equity shares. Broadly what distinguishes an equity shareholder from a non-equity shareholder is his/her right as regards dividends and as regards capital. An equity shareholder has the right to participate in a distribution and share in any surplus assets on a winding-up beyond a specified amount.		Equity shareholders have a right to share in the profits of the company or any surplus assets on winding up. In accordance with legislation and accounting standards, shares in a company’s share capital may usually be either equity shares or non-equity shares. Broadly what distinguishes an equity shareholder from a non-equity shareholder is his/her right as regards dividends and as regards capital. An equity shareholder has the right to participate in a distribution and share in any surplus assets on a winding-up beyond a specified amount.

imported>Jeeten.patel@thinkpublishing.co.uk: Jeeten.patel@thinkpublishing.co.uk moved page An Introduction To Equity Capital to An introduction to equity capital

2014-10-08T09:42:17Z

Jeeten.patel@thinkpublishing.co.uk moved page An Introduction To Equity Capital to An introduction to equity capital

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Revision as of 09:42, 8 October 2014