preemptive right

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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 ?
Symbian's newest shareholder, Samsung, chose not to exercise its pre-emption rights although it was fully involved in the discussions.
Of course, the issue of pre-emption rights is only relevant where legal title to the shares is actually being transferred, and there are alternative ways to structure an LTIP which do not involve the employees receiving actual shares in the company.
Mavricos said the issue here is the facility's construction, not operation, and the construction has complete pre-emption rights.
The resolution asked them to waive pre-emption rights, which give existing shareholders the right to new shares before outside investors are brought in.
As the Indians waited for the government to waive its pre-emption rights and consummate the deal with the multinationals, the government asked for time to seek an alternative offer from the Libyans.
Nokia said that the transaction was now moving to its final phase where other shareholders of Symbian could participate in the transaction by using their pre-emption rights.
Pre-emption rights among the biggest shareholders mean Pubmaster shareholders must all agree to sell out of the investment, or collectively buy out WestLB.
Mr Tchenguiz holds pre-emption rights should any other investor want to exit.
BellSouth, one of the shareholders in E-Plus, decided to use its pre-emption rights under the shareholders' agreement and purchase this stake from Vodafone.
Of the other companies involved, United News & Media, William Hill and the Racecourse Association (prompted largely by Uttoxeter) took up their pre-emption rights. Racal and the Tote did not.
This comes after Klovern announced on 27 May 2019 that the company, through its indirectly wholly-owned subsidiary Dagon Sverige AB, had subscribed for shares in Tobin Properties AB through a share issue with pre-emption rights for existing shareholders.