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 ?
First Gen, however, has already paid PHP7.8bn worth of debt and will further reduce its debt by another PHP5bn using the proceeds of the PHP15bn stock rights offering.
Request for comments: Notice 2006-4 requests comments on the proposed regulations, specifically on how the standards proposed for determining the FMV of stock subject to stock rights may be improved.
If the fair market value of the rights is less than 15% of the fair market value of the underlying stock on the date of distribution, investors do not make any basis allocation (and the basis of the stock rights is $0) unless they take action and make an irrevocable IRC Sec.
* the period for substituting nondiscounted Stock Rights for discounted Stock Rights (although there can be adverse consequences to participants if the substitution of vested rights does not occur until 2006).
Nevertheless, poison pill stock rights are not discussed in the IRS's guidelines on contingent stock rights in B-type reorganizations.
PERC's proceeds from its stock rights offering hovered at P752.924 million; and these were largely channeled to the company's renewable energy ventures in the past 3-4 years.
Trinity Place Holdings Inc (NYSE MKT:TPHS) revealed on Thursday the final results of its common stock rights offering at USD7.50 per share, under which a total of 1,884,564 shares are being issued.
In a regulatory filing, the bank said that it has completed a PHP32bn stock rights offer with existing shareholders.
UBS AG (NYSE: UBS) (ZHR: UBSN) (UBSN.VX) is sole lead manager of the stock rights offer, which will be priced on December 10, 2010 and completed on January 14, 2011, according to a report by Dow Jones.
Manila Mining Corporation (Manila Mining) (MA.PH), a mining company, is planning a one-week stock rights offering starting April 7, according to the Philippine Stock Exchange.
* Includes stock rights in which a corporation either reported (or reasonably expects to report) a financial expense due to the issuance of a stock right with an exercise price lower than the fair market value of the underlying stock at the grant date that was not timely reported on financial statements or reports for the period.