City regulator relaxes rules on fundraising to fight coronavirus cashflow crisis

The City regulator smoothed the path for companies requiring emergency fundraising on Wednesday by easing some rules on raising money from shareholders.

In a sign of the looming wave of cash calls ahead, the Financial Conduct Authority has told companies to make greater use of new rules which shorten prospectuses.

Before, companies would have to issue weighty tomes if they wanted to raise money and hold shareholder votes in person to get them approved.

The FCA is allowing companies to keep those prospectuses brief and temporarily permit firms to get shareholder approval through the post to comply with the Government’s “stay at home” rules.

“With capital markets open, we expect equity and debt capital markets to play a vital role in providing the finance to businesses that will aid the recovery,” the regulator said.

Large companies like Asos, WH Smith, SSP and Auto Trader have tapped shareholders for cash since the crisis began.

The eased funding rules may benefit brokers such as Numis, Cenkos and Peel Hunt, which often take commissions on deals to raise cash.