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 ?
Preemption rights of current shareholders were excluded according to section 186 para.
This increase is effected without any preemption rights for the existing shareholders of the company or others.
The definitive buyer will be conditioned upon AIRTEL shareholders' preemption rights.
5 per share of DKK 1 and are issued without any preemption rights for the other shareholders of the company or others.
Completion of the acquisition is subject to the satisfaction of a number of conditions including the waiver of certain preemption rights and receipt of governmental approvals.
The new ordinary shares and the ordinary share preemption rights have not been and will not be registered under the applicable securities laws of the United States, or any other jurisdiction outside of Turkey.
Through May 17, 2000, shareholders will have preemption rights with regard to the shares issued, at a ratio of 0.