Listed British companies will be able to raise billions of pounds of fresh capital much more quickly in future after institutional shareholders yesterday waived their right to veto all but the biggest rights issues.

Companies would no longer have to hold shareholder votes except when expanding their share capital by more than two thirds, the Association of British Insurers (ABI) said yesterday. The trigger point has been one third.

The ruling paves the way for easier, quicker rights issues by the dozens of blue-chip companies expected to consider tapping their shareholders for fresh equity finance over the next year as debt becomes less plentiful and more expensive.

Rio Tinto and Xstrata, the miners, Debenhams and DSG International, the retailers, Prudential, the insurer, Hammerson and Liberty International, the property developers, and banks, including HSBC, are regarded as possible candidates to raise fresh capital from shareholders.

The ABI, whose members own about 15 per cent of the stock market and which acts as a lobby group for institutional investors, said that the aim was to make it easier for companies to initiate deeply discounted rights issues. It said that directors of companies avoiding the normal vote would all have to submit themselves for re-election at the next annual meeting. Traditionally, only one in three directors comes up for re-election each year.

The ABI was responding to growing concern that rights issues were taking too long, endangering vulnerable companies and raising the chances of market abuse. The reform was one of several measures suggested by the Rights Issue Review Group, a body set up by the Chancellor in the wake of the prolonged and accident-prone capital-raisings by banks last summer.

Bradford & Bingley took 96 days to raise its rescue capital, money that proved insufficient as the bank went on to partial nationalisation. HBOS took 83 days. Again, it was insufficient, and the bank is tapping the Government for more capital.

The waiving of the need for an extraordinary general meeting, which itself requires a notice period, means that rights issue periods can be shaved by 16 days, cutting the normal timetable from the present 32 days to 39. The ABI said that the old one-third rule was insufficient because so many rights issues had been priced at a deep discount, limiting the amount of new capital that could be raised.

Pre-emption rights, whereby existing shareholders have first option on buying new shares, would not be weakened by the changes, the ABI said. Peter Montagnon, the ABI's director of investment affairs, said: “Members fully support the need to speed up the rights issue process where possible, provided that the vital principle of pre-emption is respected.”

The Treasury and regulators are considering other ways in which rights issues can be condensed. The Financial Services Authority (FSA) is examining whether subscription periods - the time given to share-holders to mull over a share offer and put in applications - can be reduced from three weeks to two.

The FSA is also considering whether to extend or modify its ban on the short-selling of financial stocks. John McFall, chairman of the Commons Treasury Select Committee, and Vince Cable, the Liberal Democrat Treasury spokesman, have called for extension of the ban. A decision is imminent.

Short-sellers were blamed for amplifying the collapse in bank shares during sensitive rights issue periods. Shorting the shares while buying the nil-paid rights has been a classic arbitrage play during rights issues.

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