- Published on
KembaraXtra – Legal Terms – Pre-emptive Right
A pre-emptive right is a right giving existing shareholders priority when certain shares are issued or transferred.
Under the Companies Act 2006, shareholders may have the right to be offered newly issued shares before those shares are offered to outsiders.
This protects shareholders from dilution of their ownership interests.
Pre-emptive rights may also arise under a company’s articles of association, particularly in private companies.
In that context, a shareholder wishing to transfer shares must first offer them to existing shareholders on specified terms.
Such rights are commonly used to preserve control within closely held companies.
A pre-emptive right is a right giving existing shareholders priority when certain shares are issued or transferred.
Under the Companies Act 2006, shareholders may have the right to be offered newly issued shares before those shares are offered to outsiders.
This protects shareholders from dilution of their ownership interests.
Pre-emptive rights may also arise under a company’s articles of association, particularly in private companies.
In that context, a shareholder wishing to transfer shares must first offer them to existing shareholders on specified terms.
Such rights are commonly used to preserve control within closely held companies.
0 Comments