Abstract

The article analyses differences between the right of priority and the right of pre-emption with respect to stocks and shares as regulated in the Civil Code. Those notions are frequently used interchangeably or as synonyms, whereas such identification leads to misunderstanding. The institution of “priority” and “pre-emption” have a different purpose and character, and they are separately regulated by law. A legal analysis of the notions of the right of priority and the right of pre-emption leads to a conclusion that these are two separate institutions. They differ with respect to a different procedure as regards buying shares under the right of priority and the right of pre-emption, and as a result different legal consequences of infringement. The right of priority is more extensive than the right of pre-emption as it applies in all cases of disposal, not only selling shares. In the light of the above, practically the most important issue for shareholders should be to regulate the procedure for the acquisition of shares with the right of priority or the right of pre-emption in the company deed or articles. However, it frequently happens that shareholders go only as far as to simply reserve the right or pre-emption or the right of priority without specifying legal consequences – which only leads to conflicts as to the selection of a proper acquirer.