Preemptive Right

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Related to Preemptive Rights: Right of first refusal, Drag Along Rights

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 ?
Preemptive rights may come into play not only in structuring incentive packages for prospective employees, but whenever the company issues stock to third parties.
80) USRAP exempts all non-donative options and rights of first refusal whether they in fact arise in a commercial setting or not and at least one court(81) has refused to read into USRAP the distinction drawn by the New York Court of Appeals in Bruken between commercial or governmental preemptive rights and ones arising in a private familial context.
TCP shareholders who subscribed for shares during the preemptive rights exercise period and indicated an interest to subscribe for additional shares in the first re-offering round will have the right to subscribe for 0.
In order to participate in the Capital Purchase Program, the Company will seek the approval of shareholders at the Special Meeting to eliminate preemptive rights from the Articles of Organization.
On Friday Magnit (MGNT LI - Buy) announced that shareholders may exercise their preemptive rights on a potential issue from 12 November.
Moreover, the Investors agree in their subscription agreements to subscribe to additional shares in addition to those guaranteed by the assignment of preemptive rights through the reserve of unsubscribed shares, in the event that there are remaining unsubscribed shares.
H0RSHOLM, Denmark -- LifeCycle Pharma A/S (OMX: LCP), announced today that the third largest shareholder in LCP, Alta Partners has informed LCP that Alta Partners will exercise a significant part of its preemptive rights to subscribe for a total of 1,400,000 offer shares each at DKK 17 per share in connection with the offering announced on March 18, 2008, in total an investment of DKK 23,800,000.
The company has in exchange proposed to waive its preemptive rights on the 5% stake in Petronet that Asian Development Bank has put out for sale.
Chesapeake elected to exercise its preemptive rights to acquire these shares as a result of Gastar's issuance of common shares to Navasota Resources, L.
The projected regulation on national procurement gives preemptive rights to domestic suppliers in acquisitions from BRL 620,000.
RAO EES still more attractive for shareholders with preemptive rights.
We have also agreed to grant preemptive rights with respect to further offerings of our common stock for a period of 24 months.