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 ?
Notification of interest to subscribe for shares without subscription rights is possible during the subscription period.
All exercises of subscription rights in the Rights Offering and subscription agreements submitted in the Community Offering are irrevocable.
The subscription rights, which would allow holders to buy series C Liberty Broadband common stock at a discount, are aimed at raising capital for general purposes of Liberty Broadband.
14 November 2011 - Lexicon Pharmaceuticals (NASDAQ:LXRX) has announced plans to launch a rights offering to its shareholders in a move that would offer investors non-transferable subscription rights to acquire up to 144,247,800 shares of the company's common stock in the aggregate.
According to the company, the total consideration of the repurchase of the convertible bonds and the subscription right was USD13.6m in cash, excluding accrued interest.
Under the terms of the rights offering, all record holders of the company's common stock as of July 29, 2012 will receive, at no charge, one subscription right for each share of common stock held as of the record date.
Stockholders of Motricity's common stock as of the record date will receive one transferable subscription right for every one share of common stock owned as of that date, subject to the registration statement being declared effective by the SEC.
Mondobiotech's current shareholders will be given ten subscription rights for each listed common share and one subscription right for a non-listed voting right share.
Under the proposed rights offering, Inpixon will distribute one non-transferable subscription right for each share of common stock, preferred stock and each participating warrant held on the record date.
Under this issue, shareholders will receive one subscription right for each Class A and B share held on the record date, 31 May 2016.
Under the terms of the proposed transaction, all holders of the company's common stock on record as of 17 July 2012 will receive, at no charge, one subscription right for each common share they hold as of the record date.