New Clause 66

Company Law Reform Bill [Lords] – in a Public Bill Committee at 1:45 pm on 20 July 2006.

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Existing shareholders’ right of pre-emption

‘(1) A company must not allot equity securities to a person on any terms unless—

(a) it has made an offer to each person who holds ordinary shares in the company to allot to him on the same or more favourable terms a proportion of those securities that is as nearly as practicable equal to the  proportion in nominal value held by him of the ordinary share capital of the company, and

(b) the period during which any such offer may be accepted has expired or the company has received notice of the acceptance or refusal of every offer so made.

(2) Securities that a company has offered to allot to a holder of ordinary shares may be allotted to him, or anyone in whose favour he has renounced his right to their allotment, without contravening subsection (1)(b).

(3) If subsection (1) applies in relation to the grant of such a right, it does not apply in relation to the allotment of shares in pursuance of that right.

(4) Shares held by the company as treasury shares are disregarded for the purposes of this section, so that—

(a) the company is not treated as a person who holds ordinary shares, and

(b) the shares are not treated as forming part of the ordinary share capital of the company.

(5) This section is subject to—

(a) sections (Exception to pre-emption right: bonus shares) to (Exception to pre-emption right: securities held under employees’ share scheme) (exceptions to pre-emption right),

(b) sections (Exclusion of requirements by private companies) and (Exclusion of pre-emption right: articles conferring corresponding right) (exclusion of rights of pre-emption),

(c) sections (Disapplication of pre-emption rights: private company with only one class of shares) to (Disapplication of pre-emption rights: sale of treasury shares) (disapplication of pre-emption rights), and

(d) section (Saving for certain older pre-emption requirements) (saving for certain older pre-emption procedures).’.—[Margaret Hodge.]

Brought up, and added to the Bill.