preemptive right

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Related to Pre-emption right: Subscription Rights

Preemptive right

Common stockholders' right to anything of value distributed by thecompany.

Preemptive Right

In stock, the ability of a shareholder to maintain the same percentage of ownership in a company should the company issue more stock by subscribing to a proportional number of shares at or below the market price. This protects the investor from devaluation of his/her shares if the company decides to hold a round of financing. The purchase of this proportional number of shares usually takes place before the new issue is offered to the secondary market, and must be exercised before a certain date (known as the expiration date) if the shareholder is to maintain the same percentage of ownership. It is also called a subscription right. See also: Anti-dilution provision.

preemptive right

A stockholder's right to keep a constant percentage of a firm's outstanding stock by being given the first chance to purchase shares in a new stock issue in proportion to the percentage of outstanding shares already held. Not all firms provide the preemptive right, which is more important to stockholders owning a significant part of a company. Also called subscription privilege. Compare privileged subscription. See also special subscription account.
References in periodicals archive ?
Due to the ongoing dispute related to Polaris' right of first refusal and pre-emption right, on 30 June 2016 it was announced that the completion of the share transfer would be delayed until the third quarter.
Of course, the issue of pre-emption rights is only relevant where legal title to the shares is actually being transferred, and there are alternative ways to structure an LTIP which do not involve the employees receiving actual shares in the company.
There were also believed to be question marks over Mr Ashley's move, as pre-emption rights can mean existing shareholders have to be offered right of refusal ahead of an outside investor.
2% of the shares in Unity Trust have certain pre-emption rights in respect of the shares held by the Co-operative Bank.
7%), waiving or failing to exercise their pre-emption rights under the terms of the Northparkes joint-venture agreement.
Landsbanki has to accept an offer from someone else, then we can match it," said Walker, referring to his pre-emption rights to match any successful bid.
The Board of Directors has approved the issue of Convertible Enhanced Capital Securities (CECS) of up to e1/4294 million through pre-emption rights to all existing shareholders.
87% of the share capital of UOL but decided to give up its pre-emption rights.
The acquisition, however, may not include Fermiers Landais, as agricultural cooperative Maisadour could apply pre-emption rights
The councils have given the investment consortium exclusive permission to buy after waiving their right to block the deal through pre-emption rights, it is claimed.