These proposals follow recommendations made in the Rights Issue Review Group (RIRG) report to the Chancellor of the Exchequer on 24 November 2008
During a rights issue subscription period, existing shareholders of the company have the right to buy new shares in proportion to their existing holdings. These rights can also be bought and sold in the market. The proposed rule change will only apply to the minimum subscription period. Issuers and their advisers can still conduct their rights issues over a longer period, if required.
Sally Dewar, managing director of wholesale and institutional markets at the FSA, said: "Reducing the subscription period will enable companies to raise capital much more quickly from the markets, when they need it most. Taking these steps will help limit the potential for rights issues to be disrupted by market instability, which could potentially damage investors' confidence."
The FSA, as part of the RIRG, has extensively sought market views on these proposals. Consultation on other recommendations of the RIRG that require changes to FSA rules will take place later in the year.
The consultation closes on 26 January 2009. The FSA will aim to finalise the proposals with changes to the relevant Listing Rules taking effect at the start of February 2009.
