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 ?
Interim guidance on outstanding stock rights under Sec.
When stock rights are distributed to an investor, the investor is generally not required to recognize the receipt of the stock rights as a taxable event.
* permitting the holder to exchange the Stock Right for a cash amount that would be available if the Stock Right were exercised;
"Poison pills" are contingent stock rights that are incorporated into a stock certificate or distributed as a dividend, which serve to enable a corporation to defend itself against an unsolicited tender offer.
The preamble to the proposed regulations suggests that whenever the terms of the stock agreement or those of the plan under which the right is granted provide the plan administrator with a general power to modify the terms of outstanding grants of stock rights, none of the grants will be excluded from treatment as deferred compensation under Sec.
FDC's financial services subsidiary EastWest Bank (EW) recently increased its authorized capital stock to P50 billion in preparation for its planned stock rights offering.
Holding period: Nontaxable stock rights take the same holding period as the underlying stock (i.e., the related stock's holding period "tacks on" to the stock right, under Sec.
Further, since the formation of the holding company did not have any federal or state tax consequences to the stockholders of Insituform, stockholders were not required to any action regarding their Insituform shares and the accompanying preferred stock rights and share certificates are deemed to evidence an identical number of shares and rights of Aegion.
"We're looking at a possible combination of a swap and a stock rights offering because there will be components as well that we'll need for future expansion," AC Energy President Eric T.
LT Group President Michael Tan said P6 billion to P7 billion of this year's capex will be spent on PNB's P12-billion stock rights offer.
Babcock & Wilcox announced that it has fixed March 15 as the record date for determination of shareholders entitled to participate in B&W's common stock rights offering.
The LGL Group Inc (NYSE:LGL) disclosed on Thursday that it has set the close of trading on the New York Stock Exchange on 5 September 2017 as the record date for its common stock rights offering and set USD5.50 per share as the purchase price for the common stock offered, pursuant to the rights offering.