preemptive right

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Related to Pre-Emptive Rights: Right of first refusal

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 pre-emptive rights period is expected to run from May 6 to May 17.
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.
BHP Billiton, which also has a 25% stake in Bajo de la Alumbrera, has a pre-emptive right to purchase Rio Tinto's 25% interest, should it care to do so.
But a sale was complicated by the fact that privately-owned US firm Carlson holds 22 per cent of Thomas Cook and has pre-emptive rights to acquire the remaining 78 per cent.
The transaction puts paid to France Telecom's plans to buy more than 75% of E-Plus because BellSouth, one of the founding companies of E-Plus, has pre-emptive rights over the E-Plus shares put up for sale by Vodafone (17.24%), Veba and RWE (60% in all) which France Telecom had bought in October for Euro 9.08 billion.
The deal is subject to pre-emptive rights by Disney subsidiary ESPN, which holds the remaining 32% of NetStar.
But if you issue new shares simply to allow the plan to acquire them, you may dilute the value of the shares and trigger the pre-emptive rights of other shareholders to participate in this new issue.
Further, the proposal to forward split the bank's common stock and to effect a denial of pre-emptive rights, was approved at the bank's annual shareholders meeting on 24 April 2018 in Anchorage, Alaska.
Reportedly, this capital increase is subscribed for without pre-emptive rights for the company's existing shareholders or others.
(NASDAQ: CIVB) said its shareholders have voted to approve proposals to eliminate pre-emptive rights and cumulative voting at a special meeting of shareholders.
The securities are denominated as 25 bonds of EUR 107,000 each and are initially being offered with pre-emptive rights to existing shareholders, who can exercise these rights until 24:00 CET on December 18.