Rights issues, open offers and placings in the context of employee share plans
Produced in partnership with Stephen Diosi and Caroline Nye-Wilkins of Mischon de Reya
Rights issues, open offers and placings in the context of employee share plans

The following Share Incentives practice note produced in partnership with Stephen Diosi and Caroline Nye-Wilkins of Mischon de Reya provides comprehensive and up to date legal information covering:

  • Rights issues, open offers and placings in the context of employee share plans
  • What are rights issues, open offers or placings?
  • Implications for a company's employee share plans
  • Share option plans
  • Impact
  • Method of adjustment
  • Tax treatment
  • Long-term incentive plans (LTIPs)
  • Impact
  • Tax treatment
  • More...

Rights issues, open offers and placings in the context of employee share plans

A company may need to raise additional capital for a number of reasons. This may be to fund an acquisition it wants to make or to meet ongoing financial obligations. There are a number of ways in which a company can raise the additional capital needed, including from its existing shareholders by way of a rights issue, open offer or placing.

When conducting a rights issue, open offer or placing, a company will need to consider the impact on any existing employee share plans it operates. This should be done as early as possible in the decision-making stages to ascertain what, if anything, can be done to ensure employees are not unfairly disadvantaged by any rights issue, open offer or placing.

This Practice Note looks at the main considerations that arise in relation to employee share plans on a rights issue, open offer or placing, the process that will typically need to be taken in respect of outstanding share options and awards and the associated tax treatment.

What are rights issues, open offers or placings?

In a rights issue a company will give its shareholders the opportunity to subscribe for new shares on a pro rata basis to each shareholder's existing holdings of shares. The subscription amount is usually set at a discount to market value

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