preemptive rights
right specified in the charter of a corporation, granting to existing shareholders the first opportunity to buy a new issue of stock.
Referring Terms: ...
Preemptive Rights
Definition: Right that grants existing shareholders the first opportunity to purchase a new issue of stock.
Preemptive Rights. An investor's right to purchase the investor's pro rata (i.e., proportionate) share of any additional securities issued by a company.
Preemptive Rights Clause
A term in a company's charter that states that if a company wishes to issue additional new shares they must give the right of first refusal to the existing shareholders.
(3) Preemptive Rights
If a company plans to issue new stocks, existing stockholders have the rights to subscribe to new stocks, often at lower prices, before they are issued to the public.
(4) Voting Rights ...
If a corporation's charter has a preemptive rights clause, before the company offers a new issue of securities to the public, it must offer existing shareholders the opportunity to buy new shares of stock in proportion to the number they already own.
Of course, there is no obligation to do this, but they have what is known as preemptive rights.
An offering that gives each shareholder a chance to exercise his preemptive rights.
Ring ...
NASD Rule 2790 restricted persons states that a restricted person may not own more than 10 of a stock How does this effect a stockholders preemptive rights to maintain their share? Read answer...
Does the NASD still exist? Read answer...
Alternative techniques to the underwriting via syndicated counterparties are the bought deal for the underwriting of bonds, the auction process and the preemptive rights offering.
Bibliography
Fabozzi F., Modigliani F., Jones F.
Preemptive rights: A shareholder right that allows shareholders the opportunity to maintain their per¬centage of ownership of the corporation in the event that additional shares are offered for sale.
 See also: Preemptive right, Banks, Job, Securities markets, Career
  
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