XTL investors revolt over pre-emption rights
Tuesday 14 September 2004
Shareholders at XTL Biopharmaceuticals, the London-listed Israeli drug company, threw out a motion yesterday to allow the group to ignore pre-emption rights on up to 10 per cent of the company's share capital.
The revolt, which came at the group's annual meeting, is thought to be the first time shareholders have stopped a company from waiving pre-emption rights, a strategy which loss-making biotech companies use to raise finance. Under UK company law, shareholders must be consulted if the company wishes to issue shares equivalent to more than 5 per cent of the company.
However, many biotech companies prefer to have the right to offer larger stakes to investors instantly due to the competitive nature of the industry. The short-term result of such a move, however, is to dilute substantially the holdings of existing shareholders.
The news comes days after it was announced that Paul Myners, the chairman of Marks & Spencer, is to conduct a Government-sponsored inquiry into pre-emption rights to determine whether there needs to be a change to UK regulations.
Shareholder associations are opposed to any change, arguing that it would be a violation of investors' rights. However, the biotech industry is keen to have the threshold raised to a similar level as the US, where companies can issue up to 20 per cent of a company's existing share capital without consulting shareholders. Dr Martin Becker, the chief executive of XTL, played down the significance of losing the vote, saying he was confident he would be able to get shareholder approval as and when the right deal came along. However, he conceded that consulting shareholders would slow things down, which could jeopardise potential deals.
"I think [Mr Myners] should look carefully at the US biotech market and its ability to fund itself, and where it sits today vis a vis some of the European biotech companies," he said. "This is a business which is very competitive. I think this issue needs to be explained better to shareholders and the public."
Last year, XTLstaved off a move to oust its management by Shore Capital, a boutique investment bank, which took a 20 per cent stake in the company.
- 1 School playground evacuated over 'unusually aggressive' grey squirrel
- 2 Hollywood actor Mickey Rourke beats opponent 33 years his junior in exhibition boxing match
- 3 Jennifer Lawrence scores first UK top 40 single with Hunger Games track 'The Hanging Tree'
- 4 Today was a bad day for renters, landlords, and democracy
- 5 'You should come to my house and eat cheeses with me': 4-year-old sends adorable love letter to girl at school
At least 100 dead after Islamists launch attack on Nigerian mosque
Hollywood actor Mickey Rourke beats opponent 33 years his junior in exhibition boxing match
'You should come to my house and eat cheeses with me': 4-year-old sends adorable love letter to girl at school
Scientists predict green energy revolution after incredible new graphene discoveries
Russell Brand: 'Katy Perry? I don’t know who that is'
Obama: The only people with the right to object to immigration are Native Americans
Ukip says babies born to immigrants in the UK should be classed as migrants – which would include Nigel Farage’s own children
The young are the new poor: Sharp increase in number of under-25s living in poverty, while over-65s are better off than ever
David Cameron sets out immigration reforms: We should distrust Ukip and their 'snake-oil of simple solutions'
Ukip mocked after mistaking Westminster Cathedral – for a mosque
Tamir Rice: 12-year-old boy playing with fake gun dies after being shot by Ohio police
iJobs Money & Business
Excellent Package: Austen Lloyd: EAST ANGLIA - SENIOR SOLICITOR LEVEL ROLE** -...
£Attractive Package: Citifocus Ltd: Prestigious asset management house seeks a...
£Negotiable: Citifocus Ltd: This is a varied role focusing on the firm's mutua...
£90000 - £140000 per annum + benefits: h2 Recruit Ltd: Are you a high achievin...