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 ?
Icahn, Motricity's largest stockholder, who as of July 23, 2012 beneficially owned approximately 16.5% of the company's outstanding securities and controlled approximately 14.7% of the voting power of its common stock, exercised his basic subscription privilege and his over-subscription privilege in full.
The 433,532 shares not subscribed for pursuant to the exercise of the basic subscription privileges and over-subscription privileges were purchased by the standby purchaser for a purchase price of approximately USD3m.
The subscription agent informed the company that the rights offering was fully subscribed, with 15,833,634 shares of series C Liberty Braves common stock to be issued to those holders of rights exercising basic and if applicable, over subscription privileges. Accordingly, about 96% of the shares to be issued as a result of the offering were subscribed for, under validly exercised basic subscription privileges.