Shareholders’ Special Resolution - Disapplication Of Pre-Emption Rights

IN LIGHT OF THE ECONOMIC CRIME & CORPORATE TRANSPARENCY ACT 2023, THIS TEMPLATE IS CURRENTLY UNDER REVIEW. 

Under the Companies Act 2006, existing shareholders have the right to be offered shares pro rata to their existing shareholdings before any new shares are allotted. This is called a pre-emption right. The directors of a company may be given the power to allot shares as if the pre-emption rights did not apply by the shareholders passing a special resolution in a general meeting or by written resolution. A copy of the resolution must be sent to Companies House within 15 days.

This Shareholders’ Special Resolution - Disapplication of Section 561 Pre-emption On Share Issue contains the wording required to give directors a general power to allot shares as if the pre-emption rights did not apply. It is to be used in conjunction with “Shareholders’ Ordinary Resolution - Authority to Allot New Shares” and it will expire when that general authority to allot expires. However, the power to disapply pre-emption rights can be renewed at the same time the authority to allot shares is renewed. If you need any further advice on the disapplication of pre-emption rights, you should contact a solicitor.

Shareholders’ Special Resolutions require the votes of 75% of members present in person or by proxy, who are entitled to vote and do vote at the meeting. The meeting at which the resolution is proposed must have had at least 14 days notice, unless a shorter period was agreed by a majority in number of members holding at least 90% of the shares (95% in the case of public companies).

Alternatively, the written resolution procedure can be used, and the resolution will be passed if approved by shareholders representing 75% of the total voting rights of the shareholders entitled to vote on the written resolution on the day it is circulated.

This document sets out the required wording of the special resolution. If it is to be passed at a general meeting, it should be used in conjunction with “Shareholders’ resolutions – General Meeting Format”. If it is to be passed as a written resolution, it should be used in conjunction with “Shareholders’ Written Special Resolution”.

Optional phrases / clauses are enclosed in square brackets. These should be read carefully and selected so as to be compatible with one another. Unused options should be removed from the document.

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This document can also be found in Share Capital & Profits, in the Issue, Transfer and Allotment of Shares Subfolder, entitled Shareholders’ Special Resolution - Disapplication of Pre-Emption Rights On Share Issue.

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