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 ?
Preemptive rights may come into play not only in structuring incentive packages for prospective employees, but whenever the company issues stock to third parties.
Its earlier decision in Bruken(56) (in which the court had carved out an exception from the statutory Rule for preemptive rights or rights of first refusal arising in commercial and governmental transactions)(57) did not suggest the propriety of doing so for commercial options inasmuch as preemptive rights only marginally affected transferability and in fact "actually encouraged the use and development of the land, outweighing any minor impediment to alienability."(58) As a result, the Bruken court believed that, unlike the instant case, judicial creation of an exception to the Rule furthered the legislative intent behind the Rule.(59)
Accordingly, the UCPB shares of stock representing the 7.22 percent fully paid shares subject of the instant petition, with all dividends declared, paid or issued upon thereon, as well as any increments thereto arising from, but not limited to, the exercise of preemptive right, shall be reconveyed to the government of the Republic of the Philippines, which as we previously clarified, shall be used 'only for the benefit of all coconut farmers and for the development of the coconut industry.'"
Inter RAO starts additional issue placement under preemptive right. On January 18, Inter RAO UES to trigger the placement of 13.8 trln additional shares under preemptive right, with a view to consolidate power utility assets.
The state-owned enterprises have been created from tax payers' money and they have the preemptive right to buy their shares either through 'initial public offering' or 'secondary public offering'.
A preemptive right applicable to real estate generally only applies to the sale of real property.
Prime Minister Shahid Khaqan Abbasi announced that the government would acquire the preemptive right to acquire property.
Additionally, transfer of the shares of Japan Vilene requires consent of the other party, and each party has the preemptive right in proportion to its shareholding ratio when the company issues new shares.
The club lost an attempt to disapply preemptive rights for the second year running.
“Certain mechanisms are in place to provide trademark holders with preemptive rights in every new extension, but brand owners must be proactive and know their rights, or risk costly domain name recovery processes.
GOL Linhas Aereas Inteligentes SA (NYSE: GOL) (BM&FBOVESPA: GOLL4), a low-cost and low-fare airline in Latin America, informed its shareholders and the market, on Thursday that the period for exercise of preemptive rights upon the subscription of shares to be issued in connection with the capital increase of the company ended on 26 January 2012.