The Australian Securities Exchange has recognized the rules that enable investors to utilize a loophole during heavily discounted rights issues that often deliver windfall gains at the expense of long-term shareholders. A loop hole that is not foreign to larger corporations where a market exists and the issuer allows one offering to institutional investors to profit more in the immediate sense at the expense of long term shareholders.
The push comes after Australian Companies managed to raise a record $90 Billion over 2009. It has been a rising concern that the spread and structure of many of the offerings allowed large institutional shareholders to profit at the expense of smaller investors.
”Boards must realise the importance of retail shareholders … it seems to us at the moment that it is the right way to go to ensure there is adequate protection for the retail shareholders,” said ASX chairman David Gonski.
”The retail shareholder should be given a fair go, but if it’s a question of that or going broke because you haven’t got capital, one would assume the requirement to get the money pervades,” Mr Gonski said.