Preemptive Rights Flashcards
1
Q
Right to Maintain Percentage of Ownership
A
A preemptive right is the right of an existing shareholder of common stock to maintain her percentage of ownership in the company by buying stock whenever there is a new issuance of stock for money (meaning cash or its equivalent, like a check).
2
Q
Right Must Be Stated in Articles
A
Under the MBCA, shareholders do not have a preemptive right to purchase newly issued shares to maintain their proportional ownership interest unless the articles of incorporation provide the right. So if the articles are silent on this issue, we do not have preemptive rights.
