PREEMPTIVE RIGHT

preemptive right. A shareholder’s privilege to purchase newly issued stock — before the shares are offered to the public — in an amount proportionate to the shareholder’s current holdings in order to prevent dilution of the shareholder’s ownership interest. • This right must be exercised within a fixed period, usu. 30 to 60 days. — Also termed subscription privilege. See SUBSCRIPTION RIGHT. Cf. rights offering under OFFERING. [Cases: Corporations 158. C.J.S. Corporations §§ 133–137.]

[Blacks Law 8th]