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Invitation to Apply for New Shares


If pre-emption rights exist, new shares in a company must be offered first to existing shareholders in proportion to their current shareholding. This anti-dilution measure is designed to allow current shareholders to maintain their existing percentage shareholding in the company, should they choose.

This template letter therefore invites existing shareholders to take up an offer to purchase shares in a proposed allotment of new shares pro-rata to their existing shareholding. If pre-emption rights have not been disapplied or waived (see below), this procedure must be followed even if the company is aware that shareholders will not take up this right. This must take place before new shares are offered to outside investors and must be made in writing and the company must allow at least 21 days for the shareholder to take up the offer.

Note that a private company may disapply pre-emption rights, either permanently by amending its articles of association or by special resolution for a specific allotment. A company may also enable its shareholders to waive their pre-emption rights in relation to a proposed allotment of shares. This subfolder includes both a template shareholders’ special resolution to disapply pre-emption rights and a deed of waiver of pre-emption rights should this be a preferred route. However, no issue of shares should be made without knowing what pre-emptive rights apply under the articles and how these relate to current statutory provisions.

This letter is in open format. The requisite details should be inserted into the highlighted fields or the wording can be adjusted to suit your purposes. Wording in square brackets is optional. If it is required, then the brackets should be deleted and the wording within them retained. If the wording is not required, then it can be deleted.

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Invitation to Apply for New Shares is part of Corporate Documents. Just £35.00 + VAT provides unlimited downloads from Corporate Documents for 1 year.

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