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 ?
Subject to various government approvals, Kazakhstan state preemption rights and co-venturers' preemption rights, ONGC Videsh Limited, the international arm of Oil and Natural Gas Corporation Limited, India, would acquire ConocoPhillips' interest in Kashagan, which is located in the Kazakh sector of the Caspian Sea.
For the same reason, shareholders are advised to vote against extra powers of the Managing Board to buy in shares or issue shares or to waive or limit preemption rights.
At the end of 2003, if the Kingdom of Marocco does not place an additional 16% interest in Maroc Telecom with a third party investor, or VU exercises preemption rights, puts/calls may be exercised between the parties at then fair market value.
Preemption rights of eligible co-shareholders need to be observed before the agreement can be effected.
Preemption rights of current shareholders were excluded according to section 186 para.
The definitive buyer will be conditioned upon AIRTEL shareholders' preemption rights.
This increase is effected without any preemption rights for the existing shareholders of the company or others.
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.