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 ?
The bank's announcement said it "intends to strengthen its capital position following the acquisition with the capital raise, of which approximately e1/4100 mln will be via a pre-emptive rights issue and approximately e1/450 mln will be via a private placement to Poppy Sarl, an entity ultimately owned by funds whose investment manager is the Pacific Investment Management Company LLC [PIMCO] or an affiliate thereof."
VTB Bank expects that the Federal Agency for State Property Management (FASM) will not exercise its statutory pre-emptive rights in connection with the Offering, which is expected to result in a dilution of the FASM's current shareholding of 75.5 per cent to 60.93 per cent, following the placement of all New Shares.
Botswana will not exercise its pre-emptive right to acquire an additional 10% stake in De Beers, the country's Ministry of Minerals, Energy and Water Resources, said earlier this week, officially announcing the Botswana Government's decision to withdraw from the deal.
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 transaction with Woodside was subject to pre-emptive rights held by the other joint venture parties which allowed those parties to proportionally increase their interest in the joint venture on terms equivalent to that agreed in the Origin-Woodside transaction.
The proposed share capital increase will be conducted as a Rights Issue with pre-emptive rights for existing shareholders in Norwegian Air Shuttle ASA.
Prior to the application for listing, GIPS had raised USD10m in a pre-emptive rights offer.
ABC's board of directors, at a meeting held prior to a general assembly yesterday, called for an extraordinary general meeting on April 29 to approve the proposed increase in the authorised capital of the bank from $1.5 billion to $2bn with a proposal to increase the issued capital from $1bn to $1.5bn by way of a pre-emptive rights offering to existing shareholders.
Some issues remain to be resolved, however, such as pre-emptive rights of other parties to the venture and the Nigerian government (see survey of Nigeria in the current volume, Nos.
* Pre-emptive rights, which allow shareholders to maintain their relative equity in the company when new shares are issued.