preemptive right

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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 ?
Symbian's newest shareholder, Samsung, chose not to exercise its pre-emption rights although it was fully involved in the discussions.
Mavricos said the issue here is the facility's construction, not operation, and the construction has complete pre-emption rights.
The resolution asked them to waive pre-emption rights, which give existing shareholders the right to new shares before outside investors are brought in.
The higher cost and breach of pre-emption rights - the principle that existing investors should be given the first chance to participate in fundraising - has angered shareholders.
As the Indians waited for the government to waive its pre-emption rights and consummate the deal with the multinationals, the government asked for time to seek an alternative offer from the Libyans.
The cash deal, which includes no debt, will go ahead if the seven Midland metropolitan authorities which currently hold 49 per cent in the airport do not exercise their pre-emption rights.
He is believed to have pre-emption rights on Electra's stake and is said to be examining his options.
Nokia said that the transaction was now moving to its final phase where other shareholders of Symbian could participate in the transaction by using their pre-emption rights.
The talks are continuing -there are certain pre-emption rights that mean that it is most likely that Pubmaster will be sold as a whole,' the source said.
BellSouth, one of the shareholders in E-Plus, decided to use its pre-emption rights under the shareholders' agreement and purchase this stake from Vodafone.
It centres on obtaining a ruling about the pre-emption rights of existing shareholders when an outsider attempts to buy into the racecourse company, which is covered in the articles of association.
Reportedly, this deviation from the shareholders' pre-emption rights is that payment for the shares shall be made by set-off of claims.