preemptive right

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Related to Pre-emption right: Subscription Rights

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 ?
It is clear that the above mentioned pre-emption right to purchase the company's shares being sold, which is set forth in Article 47 of the LoC, has common features with the priority right to buy a portion held in commonly owned property, which is enshrined in Article 4.79 of the Civil Code of the Republic of Lithuania (wording effective on 16/12/2014) (hereinafter--the Civil Code).
The regulations mainly involve respect for prices and payment terms as well as priority for granting pre-emption rights.
There were also believed to be question marks over Mr Ashley's move, as pre-emption rights can mean existing shareholders have to be offered right of refusal ahead of an outside investor.
The Board of Directors has approved the issue of Convertible Enhanced Capital Securities (CECS) of up to e1/4294 million through pre-emption rights to all existing shareholders.
Folha holds 54.87% of the share capital of UOL but decided to give up its pre-emption rights.
The acquisition, however, may not include Fermiers Landais, as agricultural cooperative Maisadour could apply pre-emption rights
The councils have given the investment consortium exclusive permission to buy after waiving their right to block the deal through pre-emption rights, it is claimed.
One of the blocked resolutions would have allowed Crest's management to issue new shares worth up to five per cent of its issued stock, without giving existing shareholders pre-emption rights.
The study was conducted by Paul Mynersm chairman of retailer Marks & Spencer, who proposes relaxing rules on pre-emption rights, which give existing shareholders first refusal when a company issues new shares.
All the time we encouraged other licensees to take up their pre-emption rights." Senior executives from Panasonic, Siemens and Sony Ericsson were on hand to pledge their own support.
According to the Financial Times, Sony Ericsson, Siemens and Panasonic are expected to announce later on Wednesday (7 July) that they would use their pre-emption rights and buy a share of Psion's stake.