Pre-emption rights: allotment of shares

by Practical Law Corporate

A practice note that provides guidance on statutory pre-emption rights, which serve as a right of first refusal for existing shareholders to prevent the dilution of their holdings when a company issues new shares. This practice note focuses on the legal framework established by the Companies Act 2006 (CA 2006) for both private and public companies. It outlines when these anti-dilution rights apply to the allotment of equity securities, the process for making a pre-emptive offer, and the consequences of contravening the statutory rules. Furthermore, this practice note examines the methods for excluding or disapplying pre-emption rights, including through a company's articles or by special resolution. For listed companies, it details the additional considerations under the UK Listing Rules (UKLR) and the influential guidelines from institutional investor bodies, such as the Pre-Emption Group (PEG), the Investment Association (IA), and Pensions UK. This resource is essential for understanding the procedural requirements and strategic considerations surrounding the allotment of shares and the protection of shareholder interests.