"Preemptive rights" means that
A) existing shareholders can prevent management from issuing additional common stock.
B) common shareholders can "preempt" preferred shareholders for dividends.
C) existing shareholders are guaranteed an opportunity to retain their proportional share of ownership.
D) management can preempt the right of shareholders to receive dividends if earnings are down.

Question

Quizplus · Accepted Answer

Preemptive rights mean that existing shareholders have the right to maintain their proportional ownership in the company by purchasing newly issued shares before they are offered to the public. This prevents dilution of the existing shareholders' ownership and maintains their control over the company.

"Preemptive Rights" Means That