Preemptive Rights
/ˌpriːɛm(p)ˈtɪv raɪts/
Definitions
- (n.) Rights of existing shareholders to purchase additional shares before the company offers them to others, preventing dilution of ownership.
The shareholders exercised their preemptive rights to maintain their proportional ownership in the corporation.
Forms
- preemptive right
See also
Commentary
Preemptive rights protect shareholder equity and are often included in corporate charters or bylaws to prevent ownership dilution.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.