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.
Once you have subscribed to the Corporate Document Folder click on the
“Download Document” button below. You will be asked what you want to do
with the file. It is recommended that you save the document to a location
of your choice prior to viewing.