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 ?
able to complete due to the exercise of the preemption rights by any of
The transaction should get preemption rights and government approval.
The stake buy in Kashagan field is subject to approval of governments of India and Kazakhstan and also the other partner in the Caspian Sea field waiving their preemption rights.
Subject to various government approvals, Kazakhstan state preemption rights and co-venturers' preemption rights, ONGC Videsh Limited, the international arm of Oil and Natural Gas Corporation Limited, India, would acquire ConocoPhillips' interest in Kashagan, which is located in the Kazakh sector of the Caspian Sea.
For the same reason, shareholders are advised to vote against extra powers of the Managing Board to buy in shares or issue shares or to waive or limit preemption rights.
At the end of 2003, if the Kingdom of Marocco does not place an additional 16% interest in Maroc Telecom with a third party investor, or VU exercises preemption rights, puts/calls may be exercised between the parties at then fair market value.
Preemption rights of eligible co-shareholders need to be observed before the agreement can be effected.