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 ?
extending the exercise period of a Stock Right to a date that is no later than the later of the 15th day of the third month following the date, or December 31 of the calendar year in which the Stock Right would otherwise expire;
Discounted stock options and stock appreciation rights: A stock option or stock appreciation right (stock right) that constitutes nonqualified deferred compensation solely because the exercise price was erroneously set at an amount less than the fair market value of the underlying stock on the date of grant is a discounted stock right eligible for correction.
Nevertheless, poison pill stock rights are not discussed in the IRS's guidelines on contingent stock rights in B-type reorganizations.
Request for comments: Notice 2006-4 requests comments on the proposed regulations, specifically on how the standards proposed for determining the FMV of stock subject to stock rights may be improved.
A SMALL BUSINESS INVESTMENT COMPANY (SBIC) announced today that the Stock Rights Offering (that was available to existing shareholders only) resulted in the issuance of 458,873 additional shares of common stock and gross proceeds to the company of $1.
Clearwire Corporation, (NASDAQ: CLWR) announced today that it intends to launch a common stock rights offering, pursuant to which rights to purchase shares of its Class A Common Stock will be offered pro rata to holders of its Class A Common Stock as of a record date to be determined.
50 the price of stock rights that it will offer to stockholders on record as of August 5, 2010.
Treasury continues to be wary of arrangements under which a service provider could take advantage of the general exclusion for certain stock rights, by receiving stock of an entity related to the service recipient and then using that entity as an investment vehicle.
today announced that its Board of Directors has adopted a preferred stock rights plan.
Warburg and JLL are proposing a restructuring of Builders FirstSource's outstanding $275 million aggregate principal amount of second priority senior secured floating rate notes (the "Notes"), and a common stock rights offering to Builders FirstSource common stockholders.
PH), Philippines' third-largest lender by assets, has said that its board has approved a proposed stock rights offer to raise as much as PHP10bn (USD216.
Notice 2006-4 addresses the application of this exclusion to outstanding stock rights and, specifically, the determination of whether the stock right has an exercise price no less than the stock's FMV at the grant date.