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.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.

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)

Copyright © 1981-2005 by Gerald N. Hill and Kathleen T. Hill. All Right reserved.
References in periodicals archive ?
Telenor said the guarantees given by the other parties in court pledging to its pre-emptive rights should Telenor win arbitration were "the next best thing" to an injunction.
The report said that the firm aims to receive pre-emptive right to negotiate purchasing shares and marketing of Aston's coal mine in New South Wales through the planned share acquisition.
'The Chairman of the NOC has publicly stated that the NOC intends to exercise a pre-emptive right and purchase all the shares of Verenex at C$10 per share,' the company said in a statement included in its first-quarter earnings release.
Mike Chan, managing director of RHB, said that the company planned a joint venture, initially combined with a pre-emptive right to buy out the joint venture a few years down the road.
Empire Company Limited has agreed to subscribe for another CAD24m of debentures on the offering terms through its subsidiary ECL Development Limited pursuant to the exercise of its pre-emptive right in relation to the issue.
The sale price is believed to be set at around AUD500m, which is the price offered to News Corp Ltd by Singapore Airlines when it proposed to purchase the stake in 1999, but was prevented in doing so by Air New Zealand refusing to relinquish its pre-emptive right over the stake.
Under the terms of the transaction, LMM can nominate one person to Pretivm's board and will have a pre-emptive right to participate in any future equity financings of Pretivm, the target noted.
BPZ Resources Inc (NYSE Amex: BPZ), a US-based company that explores for oil and gas, has announced that International Finance Corporation (IFC), the company's largest shareholder, has exercised its pre-emptive right related to a private placement offering.
SIA had previously hoped to break into the Australian market by purchasing New Corp Ltd`s 50% stake in Ansett Australia, but this plan was thwarted when Air New Zealand exercised its pre-emptive right to block the sale in mid-1999.
In the same announcment, Qt stated that the company's largest shareholders Ingman Development Oy (21.38% of the company's all shares and votes on 31 January 2017), Ilmarinen Mutual Pension Insurance Company (14.62%), Jyrki Hallikainen (7.38%) and Kari Karvinen (4.80%) have preliminary announced their intention to participate in the possible rights issue in proportion to their respective share of ownership and to vote in the Annual General Meeting to be held on 14 March 2017 in favour of the proposed authorisation for the board of directors to resolve on a share issue in accordance with the shareholders' pre-emptive right.