G&C Inc.has outstanding 10,000 shares with par value of ten dollars and that Tiffany owns 5000.At the annual meeting,the shareholders decide to issue an additional 10,000 shares at par and to sell them to Sharon.Tiffany vehemently objects in order to protect dilution of her percentage of share ownership.Tiffany is exercising her _____ in this scenario.
A)cumulative voting rights
B)preemptive rights
C)abatement rights
D)proxy rights
E)divestiture rights

Question

Quizplus · Accepted Answer

Preemptive rights give existing shareholders the right to buy newly issued shares in proportion to their existing shares before they are offered to others. Tiffany is objecting to the sale of additional shares because she wants to protect her percentage of ownership in the company. This shows that she is exercising her preemptive rights to prevent dilution of her ownership.

G&C IncHas Outstanding 10,000 Shares with Par Value of Ten Dollars