What is a preemptive right?
A) It is the right of shareholders to create a trust and elect a commissioner for the trust.
B) It is the right of shareholders to make an advance voting agreement among them to vote in a specific manner.
C) It is the right of shareholders to protect dilution of their percentage of share ownership.
D) It is the right of shareholders to elect a representative, commonly another individual or a written document, through which they can cast their votes at the annual meeting.
E) It is the right of shareholders to distribute their total votes in any manner they choose-all for one candidate or several shares for different candidates.

Question

Quizplus · Accepted Answer

Preemptive right is the right of existing shareholders to maintain their percentage of ownership in a company by having the first right to purchase new shares issued by the company before they are offered to anyone else. This helps to protect against dilution of their ownership.

What Is a Preemptive Right