preemptive right


The right of current shareholders to maintain their fractional 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 explicit in a corporation's charter. also called subscription privilege or subscription right.

Use preemptive right in a sentence

Due to the Preemptive right clause the shareholders of chase bank maintained ownership and did not need to sell out.

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He at least knew he had the preemptive right to purchase more stock if issued to maintain his ownership stake in the company.

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The shareholders exercised their preemptive right, much to the chagrin of the corporate bosses who weren't thrilled with the clause in the charter which allowed this.

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