Preemptive Right

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Preemptive Right

The privilege of a stockholder to maintain a proportionate share of the ownership of a corporation by purchasing a proportionate share of any new stock issues.

In most jurisdictions, an existing stockholder has the right to buy additional shares of a new issue to preserve Equity before others have a right to purchase shares of the new issue.

preemptive right

n. the right of a shareholder in a corporation to have the first opportunity to purchase a new issue of stock of that corporation in proportion to the amount of stock already owned by the shareholder. (See: corporation, stock)

References in periodicals archive ?
Resolution 12: To disapply pre-emption rights on the reissue of ordinary shares from treasury.
The Board of Petroceltic (the " Board ") published a circular dated 16 May 2014 (the " Petroceltic Circular " ) convening an EGM to consider a resolution to disapply statutory pre-emption rights of existing shareholders (the " Resolution " ) in connection with a proposed conditional placing of up to 37,940,000 new ordinary shares to raise approximately $100 million ([pounds sterling]59.
Pre-emption rights have become a hot topic after Barclays controversially raised cash from Middle Eastern investors without first offering shares to existing investors.
While Myners insists the principle of pre-emption rights should be upheld, he also believes there should be case-by-case discussions between companies and shareholders, giving firms a freer rein to raise funds outside the existing rules.
Pre-emption rights among the biggest shareholders mean Pubmaster shareholders must all agree to sell out of the investment, or collectively buy out WestLB.
He said: "The existence of pre-emption rights applies to all Pubmaster shareholders and as a shareholder, together with all other shareholders including the management, we will decide whether or not to emplement our rights at the appropriate time.
However, when Worldview was approached to participate in the Placing, it expressed to Company management its significant concerns regarding the Placing relating to corporate governance, the approach to pre-emption rights and the justification for allocating $50 million (half of the Placing) to a single new investor.
Although the remaining shareholders of VAIT -- the two buy-out subsidiaries of co-operative regional bank Oberoesterreich, Erste Group Bank AG (WBAG:EBS) and UniCredit Bank Austria, part of Italian UniCredit SpA (BIT:UCG) -- have pre-emption rights for the shares, the possibility that they use these rights is low, VAIT head Karl Mistlberger told media OOeNachrichten.
Mavricos said the issue here is the facility's construction, not operation, and the construction has complete pre-emption rights.
A term of the consent is that the NOC waive any pre-emption rights or rights of first refusal which it may have in respect of such acquisition.
The purpose of this authorization and the reason for derogating from existing shareholders' pre-emption rights is to enable business acquisitions for a cash or non-cash consideration or by payment in the form of new shares or a combination of these, to enable an increase in the number of owners to include one or more additional significant owners for the Company, and to enable the Company to strengthen its financial position if required.
A has announced that an extraordinary meeting of the board of directors was recently called to approve a capital raise with the exclusion of pre-emption rights for an amount of up to EUR 7.