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Dilution of shares

Dilution of shares

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I have a client company with a shareholder that owns 15%. There is a proposal to increase his holding to 25% by issuing more shares, thus diluting the other shareholders holdings.
What resolution is required to do this and and what percentage agreement of the shareholders is required?

Many thanks in advance
Nigel Harper

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By nig24
13th Jun 2007 15:34

Elective resolution
As far as I have found out myself, an elective resolution with unanimous shareholder approval would allow the directors to allot the extra shares.

Could anyone confirm this?

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By robindr
13th Jun 2007 17:05

Easier than that I think, but other considerations!
The directors would normally be authorised to allocate shares, but this must usually be renewed every five years by a simple majority at the AGM (check Mem and Arts) - make sure this is up to date.

If the Mem and Arts are non-standard and don't give this authority to directors, they can be changed by Special Resolution (requiring 75% vote at AGM/EGM) or 100% shareholder approval as a Written Resolution.

Beware also: pre-emption rights, BIK if not bought at market value, are the shares already Authorised?

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