Nearmap Ltd (ASX: NEA) shares have gone into a trading halt today, as the company conducts a capital raising.

That’s despite telling investors and the market on Monday, “Nearmap does not require new capital in order to progress its existing business plan and the Company advises that, at this time, no decision with respect to whether to seek further funding (or as to what form it may take) has been made.” [Emphasis mine].

No wonder many investors are shaking their heads.

So what is the company raising capital for if it doesn’t need it to progress its business plan?

It seems Nearmap became aware of speculation that it was about to undertake a proposed capital raising yesterday. If that is the case, and the company was considering raising capital, then surely the company should have requested an immediate halt to trading in its shares.

If there was speculation in the market that Nearmap was about to raise capital, then it’s also possible that some trading yesterday was ‘more informed’ than the rest of the market.

It’s a bad reflection on the board and management of Nearmap that they didn’t immediately request a trading halt – and retail shareholders can rightly feel aggrieved – especially because we seem to have been excluded from the capital raising.

Yep, Nearmap is yet another company I’ve added to my blacklist for conducting an unfair institutional placement, rather than a pro-rata, renounceable rights issue for all existing shareholders. Instead, institutional investors are likely being offered the chance to buy shares in the company at a discount to the last closing price – whether they are existing shareholders or not.

In other words, investors who have had nothing to do with Nearmap in the past are likely being offered discounted shares in the aerial photomapping company.

There’s no word if Nearmap is even considering a share purchase plan (SPP) to give existing investors a chance to buy shares on the same terms as institutional investors. But even an SPP is unfair because it does not allocate shares on a pro rata basis. If you hold 1 share or 100,000 shares (or even more) and are not an institutional investor, under most SPPs, you can buy a maximum of $15,000 worth of shares.

Companies don’t get too many black marks from me before I pull the plug on them for good. Nearmap has its first.

Interestingly, the ASX has also suspended Nearmap’s shares from trading under listing Rule 17.3 – which is not at the company’s request.

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Motley Fool writer/analyst Mike King owns shares in Nearmap. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.