preemptive right

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Related to Preemptive Rights: Right of first refusal, Drag Along Rights

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 ?
In doing so, we explained that, unlike options, preemptive rights (or rights of first refusal) only marginally affect transferability .
In case Qatar agrees to our terms, we could consider waiving our preemptive rights on ADB's stake.
The purchased shares included approximately 200,000 shares that were purchased by a holder of our Series D Convertible Preferred Stock in connection with the exercise of its preemptive rights.
6 million by granting preemptive rights to shareholders against cash and noncash contributions.
The offer price is to be determined after the preemptive rights expiration.
Marfrig's shareholders can exercise their preemptive rights in up to 30 days, starting from the date of the notice to the market, and shareholders must pay the shares within this period.
Alcoa exerted its preemptive rights in accordance with the shareholding agreement between the consortium for the construction of the Estreito hydroelectric power plant as did Suez Energy South America, who bought the remaining 10.
In addition, for one year or the period of the London Arbitration Court's investigation into the issuance of new VimpelCom shares in Telenor's favour, Altimo agreed not to take any actions which could dilute Telenor's stake below a simple majority and to take all necessary actions to facilitate VimpelCom's preemptive rights exercise, if the arbitration tribunal supports Telenor.
2% of the shares offered, were subscribed for in connection with the preemptive rights offering.
Nasdaq:INKP) today announced that the Philadelphia Court of Common Pleas entered a final judgment order approving the settlement of InKine's class action litigation related to the denial of certain claimed preemptive rights.
Since then, Telenor has been seeking to enforce what it considers the exercise of its preemptive rights.
Calichera") has successfully completed the placement of the stock corresponding to its capital increase through shareholders' preemptive rights, which was launched on August 2, 2007.