British American Tobacco Plc | Disapplication of statutory pre-emption rights at British American Tobacco Plc

Status
AGM passed
AGM date
Previous AGM date
Proposal number
19
Resolution details
Company ticker
BATS
Lead filer
Momentum Metropolitan Life Ltd
Resolution ask
Other ask
ESG theme
  • Governance
ESG sub-theme
  • Shareholder rights
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Consumer Staples
Company HQ country
United Kingdom
Resolved clause
Momentum generally votes against the disapplication of pre-emptive rights, as this practice circumvents the need for companies to offer new shares to existing shareholders on a pro-rata basis. We believe that pre-emptive rights are fundamental to protecting shareholder value and preventing undue dilution of ownership. However, we acknowledge that there may be exceptional circumstances such as BEE transactions or financial distress requiring external capital, where a temporary disapplication may be justified. In such cases, we expect clear, transparent communication from management outlining the rationale and ensuring alignment with long-term shareholder interests.
Supporting statement
The purpose of Resolution 19 is to authorise the Directors (subject to the passing of Resolution 17) to allot new shares of the Company and to sell treasury shares for cash as if the pre-emption provisions of Section 561 of the Act do not apply. Under Section 561(1) of the Act, if the Directors wish to allot new shares, or grant rights to subscribe for, or convert securities into, shares, or sell treasury shares for cash (other than pursuant to an employee share scheme), these must first be offered to existing shareholders pro rata to their holdings. There may be occasions, however, when the Directors need the flexibility to finance business opportunities by the issue of shares without a pre- emptive offer to existing shareholders.
This cannot be done under the Act unless shareholders have first waived their statutory pre-emption rights. Resolution 19 asks shareholders to do this.
Part (a) of Resolution 19 is to authorise the Directors to conduct a rights issue or other pre-emptive offer (being an offer of shares to ordinary shareholders in proportion (as nearly as may be practicable) to their existing holdings) without the need to comply with the strict guidelines of the statutory pre-emption provisions but instead, subject to such limits, restrictions or arrangements as the Directors consider necessary. This part of the authority is limited to shares up to a nominal value of
£183,709,558 which represents approximately one-third of the issued ordinary share capital of the Company as at 4 March 2025 (being the last practicable date prior to publication of this AGM Notice).
In addition, there may be circumstances when the Directors consider it in the best interests of the Company to allot a limited number of ordinary shares or other equity securities or sell treasury shares for cash on a non-pre-emptive basis. Accordingly, part (b) of Resolution 19 is to authorise the Directors to allot new shares and other equity securities pursuant to the allotment authority given by Resolution 17, or sell treasury shares, up to a nominal value of
£27,556,433 which represents approximately 5% of the total issued ordinary share capital of the Company (excluding treasury shares) as at 4 March 2025. The authority sought under this Resolution 19 is within the limits set out in the Pre-emption Group's Statement of Principles issued in November 2022 and the Directors confirm their intention to follow the shareholder protections contained in Part 2B of the Statement of Principles.
The authority granted by Resolution 19 will expire at the conclusion of the AGM in 2026 or at the close of business on 16 July 2026, whichever is earlier. The Directors have no present intention of exercising this authority, however, the Directors consider that it is in the best interests of the Company to maintain the flexibility that this authority provides to manage the Group's capital resources.

How other organisations have declared their voting intentions

Organisation nameDeclared voting intentionsRationale
Momentum Metropolitan Life LtdAgainstMomentum generally votes against the disapplication of pre-emptive rights, as this practice circumvents the need for companies to offer new shares to existing shareholders on a pro-rata basis. We believe that pre-emptive rights are fundamental to protecting shareholder value and preventing undue dilution of ownership. However, we acknowledge that there may be exceptional circumstances such as BEE transactions or financial distress requiring external capital, where a temporary disapplication may be justified. In such cases, we expect clear, transparent communication from management outlining the rationale and ensuring alignment with long-term shareholder interests.

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