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    what is preemptive right

    0  Views: 356 Answers: 2 Posted: 12 years ago

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    The right of shareholders to maintain their fractional share ownership of a company by buying a proportional number of shares of any future issue of common stock.  Most states consider preemptive rights valid only if made specific in the corporation's charter, also called the subscription privilege or subscription rights.


    For example, if Facebook were to go public, it can be presumed that current owners would maintain their fractional shares of FB and possibly be allowed to buy a proportional shares of any future issuance of FB common stock.


     

     



    Preemptive Right Definition




    Preemptive Right - Definition of Preemptive Right on Investopedia - A privilege extended to select shareholders of a corporation that will give them the right to ...


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