To be validly exercised, a pre-emption right must be exercised within the time frame set forth by the pre-emption clause.
If the beneficiary of a pre-emption right fails to comply with all conditions regarding the exercise of its pre-emption right, including time limitations, he/she will be considered to have waived the exercise of such a right and the selling shareholder will be free to proceed with the contemplated sale.
Similarly, in the absence of a specific provision allowing the beneficiaries of a pre-emption right to require additional time for the pre-emption of shares, such beneficiaries may not delay the exercise of their pre-emption right under pretext that they need more information on the contemplated sale or that they are waiting for bank financing to purchase the shares.
The time frame applicable for the exercise of a pre-emption right must be reasonable, and must not prevent the selling shareholder from selling its shares. If this is not the case, the pre-emption clause may be judged null and void.
In practice, the time frame applicable for the exercise of a pre-emption right should be the same as that provided for the prior approval of the purchaser as a shareholder of the company (if a prior approval clause exists).
