A pre-emption clause (Swedish: hembud) is a transfer restriction in the articles of association meaning that if a share has passed to a new owner, existing shareholders have the right to buy it back. It is one of the most common ways to keep control of the ownership circle in a limited company.
When a transfer of shares covered by the clause takes place, the new owner must be notified and those with a right of redemption are given a set time to use it. The whole process must be documented correctly in the share ledger so it can be traced.
A right of first refusal clause gives named persons the right to buy shares before they pass to a new owner.
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A consent clause means the company must approve a transfer of shares before it may take place.
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A transfer restriction is a condition in the articles of association that limits how shares may be transferred.
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A transfer of shares means shares change owner, for example through a sale, gift or inheritance.
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