The Pre-Emption Group has published a monitoring report looking at implementation of the 2015 Statement of Principles and the template resolutions. The principles relate to the when considering the case for disapplying pre-emption rights

Over the course of the year, the template resolutions and the Statement of Principles have generally been followed.

The Statement of Principles provides a framework for early and effective dialogue and is supported by The Investment Association and the Pensions and Lifetime Savings Association. However, possible examples of poor consultation or disclosure have been brought to the Group’s attention.To assist companies the Group has published an Appendix of Best Practice in Engagement and Disclosure. The Appendix reiterates the Group’s view that engagement must address both the spirit and letter of the Statement of Principles. Consultation about proposed issuances must be specific and unequivocal, and the topic of whether or not pre-emption authority is to be utilised must be explicitly addressed.

In this context, companies which do not adhere to the Statement of Principles are less likely to receive ongoing shareholder support and should expect investors to question specific issuances that appear to be contrary to the Statement of Principles.

The use of the Statement of Principles will be monitored by the Pre-Emption Group on an ongoing basis, particularly in light of the implementation of the Prospectus Regulation.