Companies Act 2014 section 1022

Pre-emption rights

Section 1022 sets out the pre-emption rights that apply when a public limited company (PLC) proposes to allot equity securities, requiring that existing shareholders be given first refusal before shares are offered to outsiders.

• A PLC must offer new equity securities to existing holders of relevant shares and relevant employee shares on the same or more favourable terms before allotting them to anyone else, in proportion to each holder's existing nominal value.
• The pre-emption requirement applies only to equity securities being paid up in cash; it does not apply where securities are paid up wholly or partly otherwise than in cash, nor to allotments under an employees' share scheme.
• A pre-emptive offer must be served formally on each eligible shareholder, must remain open for at least 14 days, and cannot be withdrawn during that period.
• If the company or any officer knowingly breaches these pre-emption rules, they are jointly and severally liable to compensate any person who should have received an offer, though proceedings must be brought within two years.