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 ?
Preemptive rights may come into play not only in structuring incentive packages for prospective employees, but whenever the company issues stock to third parties.
80) USRAP exempts all non-donative options and rights of first refusal whether they in fact arise in a commercial setting or not and at least one court(81) has refused to read into USRAP the distinction drawn by the New York Court of Appeals in Bruken between commercial or governmental preemptive rights and ones arising in a private familial context.
The news suggests that the Algerian government still insists on exercising its preemptive rights to purchase VimpelCom's 51% stake in Djezzy.
John Gulas, the Corporation's Chief Operating Officer, commented that "eliminating preemptive rights is essential to the Corporation's ability to take advantage of opportunities to raise capital on a timely basis.
2012, GT Capital shareholders waived their preemptive rights to new shares to be issued by the conglomerate.
Sugih s preemptive rights issue in mid-last year was not joined by Ramba Energy.
The completion of the deal is subject to financing arrangements, the waiver of preemptive rights of the other shareholders, regulatory clearance and shareholder approvals.
Preemptive rights period announced for potential issue
7bn by offering 21,632,017 shares at a price of RUB1,003 apiece publicly, giving shareholders preemptive rights to purchase stock equal to to their stakes in the bank.
On January 9, 2009, the Company announced that it had filed preliminary proxy soliciting material with the Securities and Exchange Commission with respect to a Special Meeting of Shareholders to consider and vote upon an amendment to the Company's Articles of Organization to eliminate the preemptive rights of shareholders and enable the Company to participate in the Program.
The share have no preemptive rights and are redeemable at the option of the issuer.
It added, The shares may be issued primarily through preemptive rights offering, or through private placements or arrangements in such amount or amounts, and under such terms and conditions approved by the board of directors.