On 4 July 2016, the Investment Association ("IA") published a revised version of its share capital management guidelines. The previous version was published in July 2014.
Section 1 (Directors' Power to Allot Shares) has been amended to recognise that IA members support the Pre-Emption Group's position that there is a need for two separate resolutions for the disapplication of pre-emption rights and to expect a company seeking to disapply the pre-emption rights, which in aggregate is equal to or greater than 10% of the issued share capital to follow the Pre-Emption Group's model resolutions in doing so. The guidance also states that IA members have asked the Institutional Voting Information Service ("IVIS"), which provides corporate governance research and a member of the IA, to place an 'amber top' warning from 1 August 2016 and a 'red top' warning from 1 January 2017 for any companies that fail to follow the guidance's recommendations. IVIS produces reports highlighting breaches of best practice, with amber tops raising awareness of an issue and red tops being matters of strongest concern.
Section 4 (Issuance of Shares by Investment Trusts) has also been amended to clarify that Treasury shares should only be reissued at a discount that is lower than the weighted average discount (not the average discount as before) at which all shares held in Treasury have been repurchased.
The guidelines can be accessed here:
https://www.ivis.co.uk/media/12250/Share-Capital-Management-Guidelines-July-2016.pdf
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