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 ?
Telenor said the guarantees given by the other parties in court pledging to its pre-emptive rights should Telenor win arbitration were "the next best thing" to an injunction.
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.
Before the pre-emptive rights exercise, Campbell had announced that Arnott's Limited had entered into a sale agreement with Goodman Fielder to purchase its PNG operations.
Reportedly, on 6 September 2017, Vestjysk Bank had announced an offering of up to 744,973,396 new shares of a nominal value of DKK1 with pre-emptive rights for the bank's existing shareholders at a price of DKK1 per share of nominally DKK1.
The lender will offer a total of 33,092,676 convertible notes which will be swapped for pre-emptive rights owned in a 4-to-9 ratio.
Rizal Bank said that the board has also approved the removal of shareholders' pre-emptive rights to subscribe or buy any share.
The resolution of all the various pre-emptive rights is expected to take up to 90 days.
Brazilian airline GOL Linhas Aereas Inteligentes (NYSE: GOL and Bovespa: GOLL4) has filed a registration statement, effective immediately, with the US SEC for the registration of 2,470,794 preferred shares in a pre-emptive rights offering.
It also said BellSouth had six weeks to decide on whether to exercise its pre-emptive rights.
The issue may deviate from the shareholders' pre-emptive rights through a non-cash issue, through offsetting or may otherwise be subscribed for in accordance with chapter 13 SS 5, paragraph one, 6, of the Companies Act.
Pre-emptive rights of Siemens shareholders are excluded.
Each of these plans includes the right to dispose off shares in the company, share issue without the shareholders' pre-emptive rights and authorisation for the board to decide on acquisition offers.