Pre-Emption Rights

At Walker Foster, we provide clear, practical advice on pre-emption rights, making sure your company’s agreements are properly drafted and aligned with your objectives. Our experienced solicitors support clients across a wide range of sectors, helping to protect existing shareholders and guide businesses through complex share transactions.

Pre-emption rights are not just a technical legal concept - they are a vital control mechanism that can influence who owns and controls your company shares. We are committed to delivering peace of mind, keeping you informed and providing transparent, reliable advice at every stage.

Get in touch with Walker Foster today to speak with one of our corporate solicitors and take the next step with confidence.

How Walker Foster can help with pre-emption rights

Our corporate solicitors advise on all aspects of pre-emption rights and statutory pre-emption, working closely with shareholders, directors and investors across a wide range of sectors. We support both established companies and growing businesses, providing clear and practical guidance on how pre-emption rights apply in different situations.

Drafting and reviewing pre-emption clauses: we prepare and assess provisions within your articles of association and shareholders agreement so that pre-emption rights are clearly set out and reflect how your company operates in practice.
Advising on statutory pre-emption rights: we explain how statutory pre-emption rights arise under the Companies Act 2006 and how they apply when a company issues new shares.
Supporting the issue of new shares: we guide you through the process of offering new shares to existing shareholders, including statutory rights requirements and pro rata allocations.
Advising on the transfer of existing shares: we assist with the transfer process, including rights of first refusal and how shares should be offered to other shareholders in accordance with the company’s articles.
Helping to protect existing shareholders: we advise on steps that can be taken to protect existing shareholders from involuntary dilution and changes to their ownership percentage.
Advising on waiving or disapplying pre-emption rights: we support companies where there is a need to waive pre-emption rights or pass a special resolution to disapply pre-emption rights, including guidance on written resolution procedures.
Supporting discussions between shareholders and investors: we work with majority shareholders, minority shareholders and new investors to help navigate competing priorities and reach workable arrangements.
Resolving disputes: where disagreements arise, we provide practical advice on resolving issues relating to pre-emption rights in a constructive and commercially focused way.

We recognise that every company operates differently. Our advice is tailored on a case by case basis, whether you are dealing with newly issued shares, restructuring existing shareholdings or considering investment from new investors. We take time to understand your company, your shareholders and the wider context behind each decision.

Our focus is on helping you move forward with clarity, supporting balanced relationships between shareholders, and providing advice that reflects both your immediate needs and the longer-term direction of your company.

What are pre-emption rights?

Pre-emption rights are legal rights that give existing shareholders the first opportunity to purchase a company’s issued shares before they are offered to a third party. These rights typically apply when new shares are created or when existing shares are transferred, allowing shareholders to maintain their position within the company.

In the UK, statutory pre-emption rights arise under the Companies Act 2006 and apply when a company issues new shares for cash. In these circumstances, the company must offer those shares to existing shareholders on a proportional basis, giving them the chance to buy shares in line with their current holdings. This approach is designed to protect existing shareholders from having their stake reduced without their consent.

Pre-emption rights are particularly relevant where there is a balance between majority shareholders and minority shareholders. They provide a level of protection for minority shareholders by limiting the ability of majority shareholders to issue additional shares without first offering them to others within the company. In this way, pre-emption helps maintain fairness and transparency in how ownership is managed.

These rights can also be extended through a company’s articles of association or shareholders agreement to cover the transfer of existing shares, often referred to as a right of first refusal. Overall, pre-emption rights play an important part in helping to protect existing shareholders and manage how ownership and control of a company evolves over time.

Our approach to pre-emption rights

At Walker Foster, we take a practical and supportive approach when advising on pre-emption rights. For many company shareholders, decisions around new shares, existing shares and the future of the business are rarely straightforward. They often involve balancing commercial priorities with relationships between shareholders, as well as planning for growth, investment or future succession. Our approach includes:

Understanding your company, shareholders and future plans: we take time to understand how your company operates, who the existing shareholders are, how current shareholdings are structured, and what your long-term plans involve, including investment, growth or succession.
Reviewing your articles of association and shareholders agreement: we examine your company’s articles and any shareholders agreements to understand how pre-emption rights, statutory pre-emption and transfer provisions currently apply to new shares and existing shares.
Explaining statutory pre-emption rights clearly: we provide straightforward guidance on how statutory pre-emption rights under the Companies Act apply to equity securities and newly issued shares, including how offers must be made to existing members on a pro rata basis.
Assessing risks around existing shareholdings: we identify potential issues such as involuntary dilution, unclear rights of first refusal, or gaps in protection for existing shareholders and minority shareholders.
Advising on the transfer of existing shares: where shares are being sold, we guide you through the process set out in the articles of association, including first refusal provisions and how shares offered must be made available to other shareholders.
Supporting the issue of new shares and investment: if your company is issuing new shares or bringing in new investors, we advise on how pre-emption rights apply and how to balance the interests of existing shareholders with the needs of the business.
Advising on waiving or disapplying pre-emption rights: where appropriate, we explain the process for waiving pre-emption rights or passing a special resolution to disapply pre-emption rights, including the use of a written resolution or general meeting.
Drafting and updating legal documents: we prepare or amend articles of association and shareholders agreement provisions so that pre-emption rights are clearly set out, properly drafted, and aligned with your company’s objectives.
Supporting communication between parties: pre-emption rights often involve multiple shareholders and investors. We support clear and constructive communication so that decisions can be made with confidence.
Reviewing arrangements over time: as your company evolves, we remain available to review your articles, share structures, and pre-emption provisions so they continue to reflect your current position and future plans.

Companies and shareholders often face both practical and relational challenges when dealing with pre-emption rights. Decisions about issuing new shares, bringing in new investors, or managing the transfer of existing shares can affect ownership, influence, and the future direction of the company. These situations may involve differing priorities between majority shareholders, minority shareholders, and other parties.

We also recognise that discussions around ownership and control can feel sensitive, particularly in long-standing or family-run companies. Our role is to support you with clarity, care and professionalism, helping you move forward with arrangements that reflect your company’s needs and the interests of its shareholders.

For all legal needs, please speak to our friendly, professional team

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FAQs about pre-emption rights

Can pre-emption rights be waived or removed?

A company can disapply pre-emption rights by passing a special resolution, usually requiring at least 75% approval. This may be done at a general meeting or through a written resolution.

What happens if pre-emption rights are breached?

If pre-emption rights are not followed, affected shareholders may have legal remedies. This could include challenging the share issue or transfer, or seeking compensation. It is important that directors follow the correct procedures set out in the company’s articles and the Companies Act.

Do pre-emption rights apply to all shares?

Statutory pre-emption applies only to newly issued shares for cash. However, contractual pre-emption rights can apply to both new or existing shares, depending on the provisions in the company’s articles of association or shareholders agreement.

If you need advice on pre-emption rights, our experienced corporate solicitors are here to help. We provide clear, practical guidance tailored to your company and its shareholders.

Whether you are issuing new shares, managing the transfer of existing shares or reviewing your articles of association, we will work with you to protect your interests and ensure full compliance with statutory and contractual requirements.

Get in touch with Walker Foster today to speak to a member of our team and find out how we can support you and your company.