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Preemptive Right
(redirected from Preemption Rights)

   Also found in: Dictionary/thesaurus, Legal 0.01 sec.
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.


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5 billion purchase of Heritage Oil's 50 per cent share of Ugandan Blocks 1 and 3A -- in which London-listed Tullow Oil has preemption rights.
5 billion purchase of Heritage Oil s 50 percent share of Ugandan Blocks 1 and 3A -- in which London-listed Tullow Oil Plc has preemption rights.
Though investors are concerned about the length of time this took, they are thought to be keen to retain the key principle of a rights issue, preemption rights.
 
 
 
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