Disclosure lapse in dealing of rights shares needs to be addressed

UNDER current stockmarket disclosure rules, sales and purchases of shares in companies by their substantial shareholders (those who own at least 5 per cent) have to be quickly announced so that the market is kept up-to-date as soon as possible with changes in ownership and, possibly, control.

No one would dispute that such changes are crucially relevant as far as investors are concerned - for example, if a big-name investor were to buy into or sell out of a particular company, this could influence the investment decisions of other players.

However, when it comes to rights issues, there is apparently no equivalent requirement for disclosure to be promptly made for actions taken by substantial shareholders. This is a disclosure grey area which regulators should study and fix as soon as possible.