News Release
Guidance on Share Issuing Good Practice
28 October 1999
The Bank of England has today published a booklet entitled Guidance on Share Issuing Good Practice for Listed Companies. The booklet is intended to help UK listed companies make informed choices about share issuing methods. It has been prepared at the request of the Competition Commission, formerly the Monopolies and Mergers Commission (MMC).
Following the recommendation made by the Commission in its report Underwriting services for share offers, the guidance focuses on the use of tendering for sub-underwriting and on the circumstances in which deep discounted issues might be advantageous.
The report was prepared on the basis of consultation with:
The Confederation of British Industry (CBI)
The Association of British Insurers (ABI)
The National Association of Pension Funds (NAPF)
The Fund Managers' Association (FMA, formerly the Institutional Fund Managers Association)
CISCO (formerly the City Group of Smaller Companies)
The Association of Corporate Treasurers (ACT)
The Hundred Group of Finance Directors
The above organisations have endorsed the guidance and have agreed to promote it to their members. In drawing up the guidance, the Bank of England has also consulted a number of other interested parties.
The organisations commented as follows:
- Graham Allen, NAPF: "The NAPF welcomes the guidance, which should help finance directors to understand better which method of capital-raising suits the particular circumstances of their own company."
- FMA: "The Fund Managers' Association believe that this guidance is a well balanced response to the request of the MMC and should serve as a useful checklist of the issues which companies should take into consideration when raising capital, without being prescriptive as to which solution is right."
- CISCO: "Although the widest choices are likely to be available to larger, more liquid companies CISCO commends the guidance note to smaller company finance directors as a summary of the issues to be addressed with advisers."
- Philippa Foster Back, President, ACT: "The lead taken by the Bank of England in recommending that companies consider new approaches to the methods of issuing equity will result in lower issuance costs. It is to be hoped that several companies will now proceed with non-underwritten deep discounted issues in the light of the support for this approach given by the Bank."
- The Hundred Group: "The Hundred Group of Finance Directors, representing the FTSE 100 and other major companies, is pleased to endorse this guidance from the Bank of England, which highlights the changes which are occurring in issuing methods in London to give companies greater flexibility and lower costs."
In addition, the Competition Commission and the Office of Fair Trading commented:
- Competition Commission: "We are pleased to note the timely production of this guidance implementing the recommendation in our report on underwriting services. We believe that it will be of value to businesses undertaking share issues and we hope that it will be widely used."
- OFT: "The Bank of England's guidance will help companies look for the best deal and thereby further sharpen competition in the supply of share issuing services."
Copies of the report are available from the Domestic Finance Division, Bank of England, Threadneedle Street, London EC2R 8AH, telephone 0171-601 4336, fax 0171-601 4947, e-mail jo.fisher@bankofengland.co.uk
The report is also available on the Bank of England's website.
Note for Editors
On 24 February 1999, the Monopolies and Mergers Commission (now the Competition Commission) published its report Underwriting services for share offers (Cm 4168, The Stationery Office). One of its recommendations, accepted by the Secretary of State for Trade and Industry, was that the Bank should publish guidance for companies on certain aspects of share issuing good practice.
