Section 561(1) (existing shareholders’ right of pre-emption) does not apply to an allotment of equity securities that is carried out as part of a compromise or arrangement sanctioned in accordance with Part 26A (arrangements and reconstructions: companies in financial difficulty).F905]
Definitions used in section 566A
- allotment of equity securities
(2)References in this Chapter to the allotment of equity securities—
(a)include the grant of a right to subscribe for, or to convert any securities into, ordinary shares in the company, and
(b)do not include the allotment of shares pursuant to such a right.
Defined in s.560(2) · see it in the full Act
Cases considering section 566A (4)
Sino-Ocean Group Holding Limited, Re
Confirms the significance of the statutory disapplication of shareholders’ pre-emption rights in the context of the reasoning in Re Hurricane Energy. The absence of that statutory effect, together with prior shareholder approval, distinguished the present Plan (see paras [87]-[92]; [101]-[104]).
Hurricane Energy Plc, Re
The court accepted that section 566A disapplies section 561(1) for an allotment forming part of a sanctioned Part 26A arrangement. The disapplication is triggered by the Plan procedure and does not prevent the shareholders’ rights being affected. (see paras [30]-[31])
Argo Blockchain plc, Re
Confirms that sanction of the plan could override existing shareholders’ pre-emption rights, which the plan company relied on in issuing equity to Growler and noteholders. (see paras [168]-[169])
What each judgment says about section 566A is in the case-law panel in the full Act.
Amendments and notes
1 notes from legislation.gov.uk
Amendments
- F905S. 566A inserted (26.6.2020) by Corporate Insolvency and Governance Act 2020 (c. 12), s. 49(1), Sch. 9 para. 33(3)(b) (with ss. 2(2), 5(2))