Allotment, issue and pre-emption

Subject to certain exceptions, the Companies Act 2006 (CA 2006) requires that:

1. •

   the directors of a company must not exercise any power of the company to allot shares in the company (or to grant rights to subscribe for, or convert any security into, shares) other than in accordance with CA 2006, and

2. •

   a company must not allot equity securities to a person on any terms unless it has first made an offer to allot those equity securities to each of its ordinary shareholders in accordance with CA 2006 (and the period during which the offer may be accepted has expired or the company has received either an acceptance or refusal of every offer made)—this right of first refusal is known as a pre-emption right

For a consideration of the key issues relating to the allotment and issue of shares and the pre-emption rights that apply on allotment, see Practice Notes: Allotment and issue of shares—fundamentals and Pre-emption rights on allotment—fundamentals.

For an outline of the relevant CA 2006 provisions and consideration of how they may be applied to different types