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 ?
A pre-emption right is offered to existing shareholders in respect of any future issues of shares (or other "equity securities") by the startup, giving the existing shareholders the first option to purchase the newly issued shares.
The termination followed Tullow Uganda's exercise of a pre-emption right with respect to the transaction and was allowed under the terms of the Eni.
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.
The company boosted its own 1.5% stake to 13.1%, after adding Ericsson's pre-emption rights to its own, for 57.3m pounds ($106.3m).
(Other OKIOC partners have pre-emption rights on equity changes in the consortium, allowing them to make counter-bids for at least some of BP's stake.
It centres on obtaining a ruling about the pre-emption rights of existing shareholders when an outsider attempts to buy into the racecourse company, which is covered in the articles of association.
The Greater Kuparuk Area acquisition is subject to co-owner pre-emption rights and both acquisitions are subject to regulatory approval.
Nostra Terra purchased the assets from GFP Texas Inc., which has exercised its pre-emption rights following the proposed sale of Pine Mills by its previous owner and operator, Cue Resources LLV.
Importantly, pursuant to the CCL the existing shareholders of a public joint stock company do not have pre-emption rights in respect of shares issued pursuant to an ESOP.
The rest has to do with an agreement for pre-emption rights and call options entered into with RLB OOe Alu Invest GmbH, a 100% subsidiary of Invest Holding GmbH.