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 ?
41) While the case was initiated in the late eighteenth century, when Marshall wrote his decision in 1823 he changed the time flame involved to the postrevolutionary period in order to encompass the preemption rights that interested him personally.
Alternatively, the company in question may circumvent the preemption rights of the existing shareholders by issuing CBs to the strategic investor, offering him the right, or the option, to convert such CBs into equity in the issuing company.
Article 197 - Sale of Entitlements to Rights Issue - Shareholders have preemption rights to subscribe for their company's capital increase (Rights Issue).
The way to combat the "curse," he proclaimed, was a homestead act for surveyed government land and preemption rights for unsurveyed land.
It is subject to the final execution of the sale and purchase agreements, to the relevant regulatory approvals and to partners' preemption rights only on the Iara transaction.
66 per share, with deviation from the shareholders' preemption rights.
The stake buy in Kashagan field is subject to approval of governments of India and Kazakhstan and also the other partner in the Caspian Sea field waiving their preemption rights.
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.
to authorise die Board of Directors to issue new shares and/or convertible debentures corresponding to in total not more dian 34,000,000 new shares, with or without the application of die shareholders preemption rights, in order to enable die Company to make business acquisitions or other major investments; and to authorize die Board of Directors to decide 011 repurchases and sales by the Company of its shares on NASDAQ Stockholm, where die number of shares so repurchased shall be limited so tliat shares held in treasury from time to time do not exceed five per cent of all outstanding shares of the Company.
Italian oil group Eni (BIT:ENI) has recently terminated its agreement to buy Heritage's 50% stake in Ugandan Blocks 1 and 3A, after Tullow (LON:TLW) had exercised its preemption rights.
54 billion, but the deal was subject to preemption rights of ONGC and Shell.
An Eni spokesman explained that Eni revoked the agreement signed on 18 December to buy Heritage's 50% stake in Ugandan Blocks1 ad 3A, on which UK oil and gas company Tullow (LON:TLW) has exercised preemption rights.