The Procedure Governing Dis-application Of The Companies
A private company may exclude the statutory pre-emption rights conferred on shareholders by the Companies Act 1985, s 89 either generally in relation to allotments and for a unlimited duration or in relation to particular allotments. All companies, private and public, are also permitted by the Companies Act 1985, s 95 to dis-apply s 89 by a special resolution or by a provision to such effect in their articles. It is common for listed companies to dis-apply s 89 by a special resolution although, in some cases, a composite approach, whereby the parts of the dis-application which are unlikely to change from time to time are contained in the articles but the amount of the securities covered by the disapplication is updated regularly by a special resolution passed at a general meeting of the shareholders, is followed.
S 95 dis-applications are linked to directors' s 80 authorities and thus, for public companies, are limited in duration to a maximum of five yearsAll or part of the securities covered by the relevant s 80 authority may be included in the dis-application resolution and s 89 may be dis-applied altogether or it may be applied with such modifications as the shareholders may determine.That the Board be and it is hereby empowered pursuant to section 95 of the Companies Act 1985 to allot equity securities (within the meaning of section 94 of the said Act) for cash pursuant to the authority conferred by the previous resolution as if sub-section (1) of section 89 of the said Act did not apply to any such allotment, PROVIDED THAT this power shall be limited:
To the allotment of equity securities in connection with a rights issue, open offer or other pre-emptive offer in favour of ordinary shareholders [and in favour of all holders of any other class of equity security in accordance with the rights attached to such class] where the equity securities respectively attributable to the interests of [ordinary shareholders] / [such persons] on a fixed record date are proportionate (as nearly as may be) to the respective numbers of [ordinary shares] / [equity securities] held by them [or are otherwise allotted in accordance with the rights attaching to such equity securities] subject to such exclusions or other arrangements as the board may deem necessary or expedient to deal with fractional entitlements, legal or practical problems in any overseas territory or another other matter whasoever; andto the allotment (otherwise than pursuant to sub-paragraph above) of equity securities up to an aggregate nominal amount of Ј and shall expire at the conclusion of the next Annual General Meeting of the Company after the passing of this resolution, save that the company may before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry and the Board may allot equity securities in pursuance of such an offer or agreement as if the power conferred hereby had not expired.
Rights issues may be effected in accordance with paragraph whilst paragraph gives the company a limited ability to raise share capital otherwise than on a pre-emptive basis.In a public company the normal form of the offer is renounceable so that the original recipient shareholders can renounce it freely in favour of any other person and, indeed, for listed companies it is a requirement of the London Stock Exchange that rights-issues offers should be in renounceable form. A rights issue by a private company would infringe the Companies Act 1985, s 81 if the offer of new shares was made in the fully renounceable form which is employed in public-company rights issues, but a limited amount of renunciation is permitted: by virtue of the Companies Act 1985, s 60 (7) an offer is still to be regarded as being a domestic concern so long as the class of persons to whom the offer may be renounced does not extend beyond other existing shareholders, existing employees, members of the families of such members or employees, or existing debenture holders.
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