Rights, Warrants, and Rule 144

Question 1

What are preemptive rights?

Answer 1

These rights entitle existing common stock holders to maintain their proportionate ownership shares in a company by purchasing additional shares before they are offered to the public. They come below current market price, too.

Question 2

These are valued separately from common stock and traded in secondary market during the subscription period of 30-45 days.

Answer 2

Preemptive Rights

Question 3

What are a common stockholder’s options with preemptive rights?

Answer 3

1. Exercise rights by purchasing stock with certificates and check for new stock.
2. Sell rights at current market value (negotiable) and profit.
3. Do nothing, lose all value and expire rights - unlikely.