Wragge Lawrence Graham & Co

Out of sight, out of mind: how a right of first refusal can be lost

By Clark Sargent

The High Court’s decision in Blindley Heath Investments Ltd v Bass and others is significant, both for those involved in preparing shareholders’ agreements and share sale and purchase agreements and for those advising on any shareholder disputes that might arise afterwards.

The case was all about pre-emption rights — how they were created, how they could be applied and how they could be lost. And as the decision turned principally on the question of whether or not pre-emption rights (in this case, in relation to the transfer of shares in a company) were enforceable, it may have wider significance in relation to similar rights of first refusal over other kinds of property.

As this is only a first-instance decision, it may be subject to appeal in certain respects. However, pending any successful appeal, matters now stand as follows…

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