preemptive right

(redirected from Stock Rights)
Also found in: Dictionary, Thesaurus, Legal.

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 ?
GTCAP), Metrobank's controlling and majority shareholder has committed to subscribe to at least its full rights entitlement in Metrobank's stock rights offer.
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.
Under the Proposed Regulations, modifications of a Stock Right to achieve the following results generally are not considered modifications that result in a new grant:
Nevertheless, poison pill stock rights are not discussed in the IRS's guidelines on contingent stock rights in B-type reorganizations.
The proposed stock rights offering in June, on the other hand, will add around 300 basis points to the bank's core or tier 1 capital as a ratio of risk assets.
The SEC, however, said the stock rights offer alone will not dilute the brokers' ownership and that both it and the PSE still need to do more, including revoking the status of inactive brokers.
Proceeds from the stock rights offering will be used by the PSE to fund its acquisition of additional shares in PDS Holdings Corporation as well as for its capital expenditure requirements.
The stock rights offer is among the fund-raising activities the company has planned to finance the equity component of its three projects lined up in the next two years amounting to P6.
Empire Resorts Inc stated on Tuesday its proposal to commence a common stock and series B preferred stock rights offering.
Trans-Asia Oil and Energy Development Corp stated that it has given out P600 million from the earnings of its stock rights offering to partially back the building of the 54-megawatt wind power project in San Lorenzo, Guimaras.
International Resource News-19 February 2010-Manila Mining to start stock rights offering(C)2010 ENPublishing - http://www.
Treasury continues to be wary of arrangements under which a service provider could take advantage of the general exclusion for certain stock rights, by receiving stock of an entity related to the service recipient and then using that entity as an investment vehicle.