Preemption

(noun)

The right of a shareholder to purchase newly issued shares of a business entity before they are available to the general public so as to protect individual ownership from dilution.

Related Terms

Examples of Preemption in the following topics:

  • Control and Preemption

    • Shareholders have the right of preemption, meaning they have the first chance at buying newly issued shares of stock before the general public.
    • A preemption right, or right of preemption, is a contractual right to acquire certain property coming into existence before it can be offered to any other person or entity.

  • Preferred Stock Rules and Rights

    • Preferred stock can include rights such as preemption, convertibility, callability, and dividend and liquidation preference.

  • Purchasing New Shares

    • In practice, the most common form of preemption right is the right of existing shareholders to acquire new shares issued by a company in a rights issue, a usually but not always public offering.