Companies Act (Cap. 386), article 88

88. (1) Whenever shares of a public company are proposed to be allotted for consideration in cash, those shares shall be of fered on a pre-emptive basis to shareholders in proportion to the sha re capital held by them: Provided that shares in a company, whether public or private, shall not be offered on a pre-emptive basis to the com pany itself, notwithstanding any other provision of this Act empower ing the company to hold its own shares. (2) Where the issued share capital of a company as referred to in sub-article (1) having severa l classes of shares carrying di fferent rights with regard to voting, or participation in distributions , or sharing in assets in the event of a winding up, is increased by issuing new shares for allotment in only one of these classes, the right of pre-emption of sharehold ers of the other classes is to be exercised only after the exercise of this right by the sharehol ders of the class in which the new sha res issued are to be allotted. (3) A copy of any offer of subscription on a pre-emptive basis indicating the period within which this right shall be exercise d shall be delivered to the Registrar for registration: Provided that such registration shall not be required as long COMP ANIES [CAP. 386. 57 as all the shareholders of the company are informed in writing of the offer of subscription on a pr e-emptive basis and of the per iod within which this right shall be exercised. (4) The right of pre-emption referred to in sub-article (3) shal l be exercised within a period of not less than fourteen days fro m the date of publication of the offer in the Gazette or on a website maintained by the Registrar in accordance with a rticle 401(1)( e), or from the date of dispatch of the letters to the shareholders re ferred to in the same sub-article. (5) The right of pre-emption shall not be restricted or withdrawn by the memorandum or articles: P r o v i d e d t h a t , f o r a p a r t i c u l ar allotment as referred to in this article, the right of pre-emption may be restricted or wit hdrawn by extraordinary resolution of the general meeting. In such cas e the Board of directors shall be required to present to that general meeting a written report indicating the reasons for restriction or withdrawal of the right of pre-emption and justifying the propo sed issue price. (6) A copy of the resolution referred to in sub-article (5), sha ll be delivered by the directors or by the company secretary to th e Registrar for registration. (7) The memorandum or articles or an extraordinary resolution of the general meeting may author ise the Board of directors to restrict or withdraw the right of pre-emption if the Board is authorised to issue shares in acco rdance with article 85 and fo r as long as the Board remains so authorised. (8) A copy of the resolution referred to in sub-article (7) shal l be delivered to the Registrar for registration. (9) The provisions of sub-articles (1) to (8) shall apply to the issue of all securities which ar e convertible into shares or wh ich carry the right to subscribe for shares, but not to the convers ion of such securities, nor to the exerc ise of the right to subscribe. (10) The right of pre-emption shall not be excluded for the purposes of sub-articles (5) to (8) where, in accordance with t he decision to allot shares, shares are issued to banks or financi al institutions with a view to their being offered to shareholders of the company in accordance with sub-article (1). (11) If default is made in complying with sub-articles (6) or (8 ), every officer of the company who is in default shall be liable to a penalty, and, for every day during which the default continues, to a further penalty. Chapter III - Capital i ssues by public companies 58 CAP. 386.] COMP ANIES Issue of applications for shares in or debentures of a public company to be made with a prospectus. Amended by: IV . 2003.52; L.N. 391 of 2005; IX. 2008.10; L.N. 338 of 2012; XX. 2013.79; V .2020.24..