Provisional allotment letter or PAL meaning

A provisional allotment letter (PAL) is the renounceable document used in a rights issue to notify existing shareholders of their pro rata entitlement to subscribe for new shares, and how to accept, pay for, transfer or split that entitlement. In UK market practice (under the FCA Listing Rules for companies on the Official List and admitted to trading on the London Stock Exchange Main Market), a rights issue is effected by a renounceable letter or equivalent negotiable instrument. In dematerialised form, the PAL is replaced by electronic entitlements in CREST: nil paid rights (tradable before payment) and, once the subscription price is paid, fully paid rights, which may trade until the new shares are issued and allotted. Physical PALs are typically issued only for certificated holdings. A PAL constitutes the formal offer to shareholders and contains, or incorporates by reference (often to a prospectus or circular), the contractual terms of the rights issue, including the timetable, acceptance procedures and renunciation mechanics. The concept is a descriptive market term rather than a statutory definition. Usage and legal effect are broadly consistent across England & Wales, Scotland, Northern Ireland and Ireland, including for Euronext Dublin-listed issuers, where CREST settlement and the tradeability of nil...