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Allotment of new shares with pre emption rights PDF Print E-mail
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Written by Shiraz Ahmad   
Monday, 10 August 2009

I am in the process of alloting new shares in a Ltd company and the Company's Articles and Investor Agreement contain a pre emption rights clause requiring them to be offered to the existing investors in proportion to their existing share ownership.
My question is; When writing to the Company investors to offer the new shares: should I -
1. offer them at the premium rate stating that in absence of them renouncing the shares this will be interpreted as acceptance.
or,
2. offer the investors the shares, asking for express acceptance in via writing?

My preference would be the latter and not for an absence of a response to be construed as acceptance.

Would there, in this process, also be any legal protocol for whether the shares are offered at nominal or premium rates?

Any links to templates would be much appreciated.

Thanks!


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  Comments (1)
1. Written by ndhart, on 18-08-2009 15:15
In the absence of the Articles or Investor Agreement saying the opposite, silence can not be acceptance for the issue of shares. 
 
You should offer the new shares at the same price, and on the same terms, as you offer them to a new investor.  
 
Be sure you toc check if you can do any of this wtthout an EGM for shareholder consent.

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