Tag: Preemptive Right
-
What is the preemptive right, and what are the two primary reasons for its existence?
The Preemptive Right Common stockholders often have the right, called the preemptive right, to pur-chase any additional shares sold by the firm. In some states, the preemptiveright is automatically included in every corporate charter; in others, it must bespecifically inserted into the charter. The purpose of the preemptive right is twofold. First, it prevents the…