preemptive right

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Related to Pre-Emptive Right: Subscription Rights

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 ?
Telenor commenced the arbitration on January 28, 2011 for the stated purpose of enforcing its alleged pre-emptive rights under the VimpelCom shareholders agreement with respect to the shares to be issued in connection with the combination of VimpelCom and Wind Telecom S.p.A.
In addition to the preliminary commitments received by the company earlier, Aktia Fund Management Company Ltd has also informed Qt on behalf of the mutual funds Sijoitusrahasto Aktia Capital (2.63%), Sijoitusrahasto Aktia Nordic Small Cap (1.59%) and Sijoitusrahasto Aktia Nordic Micro Cap (0.77%) of their preliminary intention to participate in the possible rights issue in proportion to their respective share of ownership and to also vote in favour of the proposed authorisation for board to resolve on a share issue in accordance with the shareholders' pre-emptive right.
Pilots who have been laid off have a pre-emptive right to new jobs in accordance with a collective agreement, signed during the staff reductions, Bjurstrom, who is also vice president flight operations at SAS Scandinavian Airlines, told ABC Nyheter.
Existing shareholders have been granted pre-emptive right to buy additional stock as part of the placement.
The bank said the number of D series shares attributable to one pre-emptive right is 0.25.
Metro said it could acquire the whole stake in case the third partner in Publimetro Mexico does not exercise its pre-emptive right to buy the remaining 8.54%.
The share issue, derogating from the pre-emptive right of the shareholders and comprising some six million new shares at market price, will be offered for subscription by shareholders, holders of capital notes and by professional clients.