Pre-emption rights

This refers to a shareholder’s right of first refusal over the issuance of new shares in the company’s capital. Often this is a contractual obligation that fulfills anti-dilution preferences and helps to protect each stakeholder’s current ownership percentage in the company. The statutory pre-emption right is found in the Companies Act 2006 that states during the event that new shares are issued, all existing shareholders of the company are entitled to buy a number of those new shares but at the pro-rata to their existing amount of shares.

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