Legal Glossary


An Intellectual Property right granted to an inventor which allows them to prevent third parties from using the invention. Patent protection does not arise automatically: an inventor must apply for, and be granted, a patent for the invention. A patent gives the inventor an exclusive right to sell, use and manufacture the invention for a defined period of time.

Pre-Emption Rights

The rights held by existing Shareholders to have first refusal on the issue of new Shares by, or the transfer of existing Shares in, a company. These rights protect Shareholders against dilution of their shareholding.

Preference Shares

A share in the company’s capital which ranks ahead of other shares, including Ordinary Shares. These rights are set out in the company’s Articles of Association and may include a preferential right to dividends, preference on liquidation and enhanced voting rights. Preference Shares are often held by VC investors.

Private Equity

A financing source that is not noted on a public exchange. Private Equity is typically composed of funds and investors that invest directly in private companies or buyouts of public companies (resulting in the delisting of those public companies and returning them to private ownership). The term “Private Equity” may include Venture Capital (e.g. in Europe) or exclude Venture Capital, treating the two as separate types of investments (e.g. in the US).

Put Option

An option which gives a right (but not an obligation) for a person to sell an asset to another person at a specified price (or a price calculated in accordance with an agreed formula). The terms of the Option will often state that the Put Option may only be exercised during a defined period of time.