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 ?
which owns approximately 17 percent of Revco's common stock (on behalf of its individual investment advisory clients), has agreed to exercise its basic subscription privileges.
has agreed to act as agent, on a best efforts basis, to solicit subscriptions for any series 3 shares remaining following the exercise of rights and the additional subscription privileges if any, available as a result of unexercised rights.
Rights holders may also subscribe for additional common shares at the subscription price to the extent that shares are not subscribed for through the exercise of all basic subscription privileges by the expiration date (as defined below) (the "oversubscription privilege").
Under the allocation procedures that have been adopted for the offering, Gunther Partners' subscription request will be afforded the lowest priority in the offering and the oversubscription requests of all other stockholders who exercise some or all of their basic subscription privileges will be filled in full before any shares are sold to Gunther Partners in fulfillment of its oversubscription request.
exercised subscription privileges for $5,000,800, which represents approximately 90% of the gross proceeds raised.