pre-emption clause

pre-emption clause

a clause usually found in the articles of private companies designed to restrict the opportunities of shares being sold outside a prescribed group of people. Essentially, the clause provides that no shares are to be transferred to any person who is not a member of the company, provided that an existing member is prepared to purchase them at a fair price to be determined in accordance with the articles. It may also be found in conveyancing permitting someone - perhaps the buyer's seller - having the right to make an offer to purchase before the house may be sold in the open market.

Collins Dictionary of Law © W.J. Stewart, 2006