Waiver of pre-emption rights: share transfer

Waiver of pre-emption rights: share transfer

Waiver by a shareholder of pre-emption rights in relation to the transfer of shares by another shareholder

Background  

Pre-emption rights: share transfer

Shareholders in a company may benefit from pre-emption rights in relation to the proposed transfer of shares by another shareholder.

What are pre-emption rights on a share transfer?

Pre-emption rights are essentially a right of first refusal. They entitle the non-transferring shareholders to acquire the shares which the transferor proposes to transfer in priority to them being acquired by another person, whether by another current shareholder or by someone who is not already a shareholder.

How do I know if pre-emption rights apply?

The rights will be set out either in the company’s Articles of Association or in the company’s Shareholders Agreement (or possibly both).  They will not be relevant if the company does not have a Shareholders Agreement and has adopted, without amendment, the Model Articles applicable to private limited companies.

A non-transferring shareholder may be willing to waive their pre-emptive rights in relation to a proposed transfer.  To do this, the non-transferring shareholder should sign a waiver of pre-emption rights.

About this pre-emption waiver

This waiver is for a non-transferring shareholder to waive pre-emption rights which they would otherwise be entitled to in relation to a proposed transfer of shares in the company by another shareholder.

Document features

Features include:

• Alternative forms of waiver, depending on whether the waiving shareholder is an individual or a company
• Options depending on whether the pre-emption rights are in the Articles of Association or Shareholders Agreement
• Execution as a Deed

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