| Commentary

143 How effective are pre-emption rights in practice?

| Commentary

143 How effective are pre-emption rights in practice?

It is entirely natural that a shareholder should not want to see his shareholding diluted by an issue of new shares to other parties, so it might be assumed that pre-emption rights would be extremely popular with shareholders. In addition, the statutory pre-emption provisions in the Companies Act 2006 Section 561 should be useful in reducing the cost of transactions, at least in theory. In practice however, the statutory regime seems to be highly unpopular with many companies, who take every opportunity to exclude or disapply them1. The reason for this seems

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