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 ?
permitting the holder to exchange the Stock Right for a cash amount that would be available if the Stock Right were exercised;
For grants made to noninsiders, the exercise price of a discounted stock right may also be reset prior to the earlier of the exercise date or the end of the service provider's year immediately following the year in which the stock right was granted.
8808081 in which the Internal Revenue Service held that "poison pill" stock rights were taxable boot in an otherwise tax-free reorganization, and (2) Revenue Ruling 90-11 in which the IRS discussed the federal income tax consequences of a corporation's adoption of a poison pill plan.
FMV determination: To meet this stock right exception, the FMV on the grant date must be determined.
Treasury continues to be wary of arrangements under which a service provider could take advantage of the general exclusion for certain stock rights, by receiving stock of an entity related to the service recipient and then using that entity as an investment vehicle.
He's in the hole with the stock right now, but it's balanced by other profits.
409A if issued with an exercise price that cannot fall below the fair market value (FMV) of the stock at the grant date, and the stock right does not contain any additional deferral feature.
There is still considerable upside, but that's not being reflected in the stock right now.
A stock right or warrant is a right to acquire a stock at a set price within a specified period.
Their key people cashed out most of their stock right before the negative press hit last May.
But the evidence submitted in court by the SEC included a number of issues of interest to investors, even if they did not provide reasons to buy or sell McDonnell Douglas stock right now.
Why might Pfizer fit the profile of an ideal "Dogs of the Dow" stock right now?