Which of the following best describes preemptive rights?
A) It is the right to purchase additional stock from the stock exchange.
B) It is the right to sell existing shares back to the corporation.
C) It is the right to purchase shares before the incorporation of a company.
D) It is the right to purchase fresh capital stock in proportion to shares owned.

Question

Quizplus · Accepted Answer

Preemptive rights allow existing shareholders the opportunity to purchase additional shares of a company's new stock issuance in proportion to their current ownership, preventing dilution of their ownership percentage.

Which of the Following Best Describes Preemptive Rights