preemptive right

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Related to Subscription Rights: Pre-Emptive Rights

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 ?
The record date for obtaining subscription rights and the right to participate in the new issue of shares with preferential rights is on 21 November 2018.
The bank is asking shareholders to approve an increase in share capital from QAR 3,266,292,100 to QAR 3,854,527,394 by way of offering of 58,823,529 new ordinary shares for subscription to eligible shareholders and holders of subscription rights in the proportion of one share for every 5.5 shares held.
The company added that "payment was done either in cash and/or through the capitalisation of debts owed by GB Auto to shareholders with the ability to trade their subscription rights".
Reportedly a proportion of shares may be assigned to a single key investor without subscription rights, who could hold between 5% and 8% of the shares.
Pursuant to the rights offering, on July 23, 2012, the company distributed 46,163,685 subscription rights to the holders of its common stock.
Sears Holdings will distribute one transferable subscription right for each share of Sears Holdings common stock held as of the record date, with the number of subscription rights required to purchase a share of Sears Hometown common stock from Sears Holdings to be determined on 7 September, the group said.
Following the capital increase, the company's shareholders' structure is going to change as Spain's savings bank La Caixa, which now holds 5.1% in Erste, indicated it would exercise all of its subscription rights and in addition acquire and exercise all of the subscription rights of the Erste Stiftung.
Trade with subscription rights will be undertaken on First North from April 27, 2009 through May 7, 2009.
Also, no fractional shares will be issued by the company in the rights offering and all exercises of subscription rights will be rounded to the nearest whole share.
The company will distribute to stockholders of record as of January 30 transferable subscription rights to purchase an aggregate of 900M new shares of the company's common stock.
Upon commencement of the planned rights offering, the company said it will distribute non-transferable subscription rights to purchase shares of its common stock to each eligible holder of its common stock as of the close of business on August 20, 2013.