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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

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.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
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.
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.