Pre-emptive rights are contractual provisions that give existing investors or co-owners the right of first refusal if another party seeks to transfer its interest. Common in real estate unit trusts, joint ventures, infrastructure vehicles, and private market funds, these clauses aim to preserve alignment among investors and protect against unvetted ownership changes.
However, in practice, PERs are often broad and ambiguously drafted, creating risk in scenarios where an interest is not directly sold but transferred upstream or via internal restructuring. As recent Dexus matters demonstrate, the consequences of triggering such clauses can be significant - even where the transaction is entirely internal.
In Dexus Funds Management Ltd v Perron Investments Pty Ltd [2024] NSWSC 407, Dexus proposed an internal corporate restructure that would alter the ultimate beneficial ownership of the entity holding its interest in a co-owned property trust. Perron, the other investor, argued that the upstream change triggered its pre-emptive rights under the trust deed.
The Supreme Court agreed, ruling that:
- The definition of "transfer" in the deed included indirect and beneficial ownership changes;
- The restructure, although internal, altered the control chain and triggered the PER clause;
- Dexus could not proceed unless Perron was offered first refusal.
The case highlights that even non-commercial, intra-group transactions can breach PER clauses if the legal wording captures changes in control or upstream ownership.
In a separate dispute, Dexus found itself at odds with Cbus Property and UniSuper over the iconic Macquarie Centre in Sydney. Following its acquisition of AMP Capital’s real estate business (which included management rights over the centre), Dexus assumed a 50% co-ownership position alongside the two super funds.
Cbus and UniSuper argued that the transfer of management rights to Dexus triggered pre-emptive rights under their co-ownership agreement - effectively giving them the right to acquire Dexus’s stake. The case went before the NSW Supreme Court, which ruled in favour of the super funds. Dexus appealed, but the decision was upheld in 2025, requiring Dexus to sell its stake (estimated at $830 million) to its co-owners.
This matter illustrates that management control, not just equity interest, can trigger PERs, especially where trust deeds or shareholder agreements reference control rights or "effective ownership".
In light of these developments, fiduciaries and M&A practitioners should incorporate the following checks into their project governance and legal workflows:
1. Upstream and Indirect Transfers Must be Reviewed
Any change in control, beneficial ownership or holding structure - no matter how internal - may qualify as a “transfer” under PER clauses.
2. Management and Operating Rights May Also be Caught
As seen in the Macquarie Centre case, transfer of management responsibilities (even if not equity) can breach co-ownership covenants.
3. Don't Assume Intra-Group Exemptions
Unless explicit carve-outs exist in the deed, internal restructures or affiliate transactions are not automatically excluded.
4. Legal and Commercial Due Diligence Must Be Joined Up
It’s not enough to confirm legal title changes - underlying operational, legal, and control documents must be mapped and reviewed.
5. Engage Counterparties Early
If a transfer might trigger a PER clause, consider notifying or negotiating with counterparties upfront, rather than risking a dispute or injunction post-execution.
At Integrated Advisory, we believe these rulings reinforce a critical truth: pre-emptive rights are not just legal clauses - they are transaction constraints. When improperly assessed, they can erode deal value, delay transactions, and escalate legal risk. When managed proactively, however, they can be navigated through clear legal structuring, timely stakeholder engagement, and strategic foresight.
Our transition and deal advisory work incorporates pre-emptive rights screening and contractual control mapping as part of our standard methodology. Whether supporting asset transitions, fund consolidations, or ownership restructures, we help clients de-risk execution while respecting the rights of co-investors.
In a world of increasing investment complexity, the cost of ignoring PERs is no longer theoretical - it’s judicial.
Are you planning on undertaking the the transfer of Private Market Assets or alternatively undergoing M&A activity or corporate restructuring? Contact us to discuss how we can assist in assessing PER implications and risks.
