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Bonus Shares - CA2006 Exception - to do what?

Bonus Shares - CA2006 Exception - to do what?

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CA2006 s.564 Exception to pre-emption right: bonus shares

Section 561(1) (existing shareholders' right of pre-emption) does not apply in relation to the allotment of bonus shares.

I would be grateful for any information to understand the meaning of the above.

Would the exception permit any of the following scenarios to take place for the issue of bonus shares:

a) to selective individuals;

b) to selective classes;

c) in respect of (a) and (b) in different proportions (ie. 1:1 to one and 2:1 to another, or some to one and none to another);

d) be waived.

Thank You.

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By TerryD
17th Sep 2015 11:49

No

It simply means that a company issuing bonus shares does not have to go through either the s.561 procedure or call a shareholders' meeting to disapply pre-emption rights. The reason for s.564 is that since bonus shares are offered to all shareholders on the same terms anyway, there's no need to consider pre-emption rights.

So anything that is a selective allotment is not a bonus issue and is still covered by s. 561.

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RLI
By lionofludesch
17th Sep 2015 12:01

Agree with the above

The exception only applies where the shareholders' percentage shareholdings are unaltered.  They just have more shares than they had before.

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