Three classmates incorporated about a week after graduation.The authorized capital was 500 000 common no-par-value shares.Each classmate took one share, and each was a director.If the directors decide to issue more shares from the treasury to raise more capital, which of the following provisions ensures that they keep their proportionate holdings?
A)Relief-from-oppression provision
B)Dissent procedure
C)Pre-emptive right provision
D)Indoor-management rule
E)Derivative-action provision

Question

Quizplus · Accepted Answer

The pre-emptive right provision ensures that existing shareholders have the right to purchase new shares in proportion to their current shareholdings before they are offered to anyone else. This means that if the directors decide to issue more shares, each of the three classmates would have the opportunity to purchase new shares in proportion to their current holdings to maintain their proportionate ownership.

Three Classmates Incorporated About a Week After Graduation