Question:Which one of the following statements is correct in relation to a company that has not excluded or permanently disapplied pre-emption rights?
A. If it issues shares for any consideration it must offer them first to existing shareholders.
B. If it issues shares wholly for cash it must offer them first to the existing shareholders.
C. If it issues shares for any consideration it must offer them first to the directors.
D. If it issues shares wholly for cash it must offer them first to the directors.
The correct answer is: If it issues shares wholly for cash it must offer them first to the existing shareholders.
Pre-emption rights only apply to cash issues assuming that pre-emption rights have not been disapplied.
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