Under what condition is less rigorous disclosure permitted in rights issues?

In the context of rights issues, less rigorous disclosure is permitted under specific conditions to streamline the process and encourage participation from shareholders. The correct answer highlights that when the offer is less than 20% of shares issued, it falls within a threshold that allows for a simplified disclosure regime.

This condition is significant because regulatory frameworks often aim to balance the need for investor protection with the practicalities of capital raising for companies. When the rights issue is a smaller percentage of the total issued shares, the perceived risk to existing shareholders is lower. Therefore, regulators recognize that extensive disclosure may not be necessary to ensure informed decision-making. This approach helps facilitate quicker access to capital, which can be advantageous for the company while still maintaining a fundamental level of transparency.

In contrast, the other conditions presented do not apply as universally or effectively. For example, requiring all shareholders to agree to the terms may be impractical and could hinder the rights issue process. Marketing securities only to institutions can change the dynamics of the offering but does not inherently establish grounds for relaxed disclosure requirements. Similarly, a threshold based on the total market value under £1 million might not reflect enough shareholder interest or maintain necessary protections for investors, making it a less relevant criterion for less rigorous disclosure.

Thus,