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The Association of British Insurers changes stance on fundraisings

The ABI (the Association of British insurers) has today revised its guidance to public companies looking to raise funds from shareholders. Under the old guidelines any share issue which increased the existing share capital by over one third would require a long drawnout process resulting in a shareholder vote. However, the ABI has today revised its advice to companies and those increasing their share capital by up to two thirds will not require a full vote from shareholders.

There is hope that this move will speed up the fundraising process which in some circumstances can be very expensive and often take weeks to put in place. The economic environment in the UK is such that when a company is short of capital they may not have weeks and weeks in hand before they hit serious financial trouble. It is interesting that the influential ABI has joined the clamour to ease the regulatory burden on public companies at a time when the UK government is looking to increase and strengthen the regulatory framework.

Even though the guidance from the ABI is not legally binding it is very much taken as word in the market as the ABI represents a substantial number of large investors.

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