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 ?
The period is extended to fifty years if the option or preemptive right is held by a government, government agency or subdivision, or a defined quasi-public entity.
Shareholders were entitled to use the preemptive right till July 2.
M2 EQUITYBITES-July 22, 2011--Yara considers using preemptive right to Burrup Fertilisers, official says(C)2011 M2 COMMUNICATIONS http://www.
Existing Pure Foods shareholders will not be allowed to exercise their preemptive rights under the share swap using the newly created shares, at a price yet to be finalized.
Retirement Plan - were requested to waive their preemptive rights to the offering to allow the entry of new investors.
The Company will now move ahead to offer existing shareholders preemptive rights to subscribe for one new share for every three existing shares held, with each new share receiving a detachable warrant to purchase a further share in the future (the Offering).
Additionally, TD will purchase USD 400m in new common equity (11m shares) from TD Ameritrade in connection with the proposed transaction, pursuant to its preemptive rights.
Kungsleden AB (STO:KLED) announced on Thursday that its board of directors has resolved, subject to the approval by an Extraordinary General Meeting, to conduct a rights issue of approximately SEK1,600m with preemptive rights for Kungsleden's shareholders.
The club lost an attempt to disapply preemptive rights for the second year running.
8220;Certain mechanisms are in place to provide trademark holders with preemptive rights in every new extension, but brand owners must be proactive and know their rights, or risk costly domain name recovery processes.
4 April 2013 -- Ohio-USA-based bank holding company Farmers National Banc Corp (NASDAQ: FMNB) said it is seeking shareholders support for a move by management and firm's board to increase the company's authorised shares and eliminate preemptive rights.