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Chapter 8

Other issues of shares

Bonus issues Rights issues

 Carried out by using some of the  New shares offered to existing
company’s reserves to issue fully shareholders in proportion to their
paid shares to existing shareholders shareholdings.
in proportion to their shareholdings.
 Raise new funds.
 Does not raise new funds.
 Shares usually offered at discount
to current market value (but not at
discount to nominal value).

Pre-emption rights

Pre-emption rights are rights of first refusal. If shares have pre-emption
rights this means a new issue must be offered to them first. A company
cannot allot equity securities without first offering them to existing
shareholders.

Only applies to ordinary shares which must be paid for in cash.

The shareholders then have 21 days to accept the offer.

Pre-emption rights can be disapplied by provision in the articles of
association or by a special resolution being passed by the members.

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