Allotting shares for cash in a single-class private company: s.550 authority and s.569 pre-emption

Two separate questions arise: whether the directors have authority to allot, and whether the statutory pre-emption rights must be followed. On authority, s.550 CA 2006 provides that where a private company has only one class of shares, the directors may allot shares of that class except to the extent that the articles prohibit it. The model articles contain no such prohibition, so no ordinary resolution under s.551 is needed. On pre-emption, s.561 requires a company that is allotting equity securities for cash to offer them first to existing ordinary shareholders in proportion to their holdings. The model articles do not exclude this. Under s.569, the directors of a private company with only one class of shares may be given power, by the articles or by special resolution, to allot as if s.561 did not apply. The only resolution needed is therefore a special resolution disapplying pre-emption.

Why B is wrong: Section 550 already gives the directors of a single-class private company power to allot, unless the articles prohibit it, so an ordinary resolution under s.551 is unnecessary.

Why C is wrong: Authority to allot is not the problem; without disapplication, s.561 requires the shares to be offered to existing shareholders first.

Why D is wrong: The model articles do not exclude the statutory pre-emption rights in s.561, so they must be disapplied by special resolution.

Why E is wrong: Lucía can take ordinary shares of the existing class; creating a new class is unnecessary and would not by itself remove the pre-emption rights.