Dilution
Every year, shareholders are asked to give directors the power to allot new shares, and to waive their right to first refusal. This allows companies to issue new shares every year up to a cap of 5 per cent of those already issued, plus another 5 per cent for specific purposes, such as relatively minor acquisitions or investments. Directors claim that they need these powers of dilution so that they can act quickly to take advantage of opportunities, since it saves them the trouble and expense of calling a general meeting to gain shareholder approval.