More Rights Issues in the Works?

It is the time of the year when most companies in Singapore will be holding their Annual General Meetings. This year, more companies are expected to put forward “blank cheque” resolutions to raise money by selling more shares, encouraged by the revisions in Singapore Exchange (“SGX”) listing rules.

In February 2009, SGX increased the limit to allow a listed issuer to seek a general mandate from shareholders for issuance of new shares on a pro-rata basis up to 100% of its issued share capital, vis-à-vis the 50% limit previously. The stock exchange believes that concerns over dilution of minority shareholders’ interests are mitigated in a pro-rata renounceable rights issue as all shareholders have equal opportunities to participate and can dispose their entitlements through trading of nil-paid rights if they do not wish to subscribe for their rights shares.

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