CAT legal chief urges pre-emption reform

Cambridge Antibody Technology’s (CAT) general counsel has welcomed a Government-commissioned document on whether the UK’s existing rules on pre-emption rights hinder certain public companies.

The report, which was prepared by Marks & Spencer chairman Paul Myners and published on 3 November, concluded that pre-emption rights are critical to the relationship between shareholders. But he questioned whether they have become too inflexible.

Speaking to The Lawyer, Diane Mellett, who is preparing CAT’s response to the report, said: “The biotechnology industry welcomes Myners’ report and the opportunity to review the question of pre-emption rights in the UK. The sector identified pre-emption rights as one of the factors that hindered the industry in raising capital in the UK as compared to the US.

“We at CAT will be responding to the consultation document, as I believe will the BioIndustry Association more generally.”

Under existing rules, companies are prohibited from issuing new shares totalling more than 5 per cent of their share capital without first offering them to existing shareholders.

The biotech industry believes that the UK rules on pre-emption rights put UK companies at a disadvantage compared with their overseas rivals. It argues that the rules should only be triggered if a company wants to issue more than 20 per cent of new shares.

The consultation period is due to expire on 16 December.