G&C Inc. has outstanding 10,000 shares with par value of ten dollars and Tiffany owns 5,000 of those shares. 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

Tiffany is exercising her preemptive rights, which allow her to maintain her percentage of ownership by having the first option to purchase any new shares issued by the company before they are sold to others.

G&C Inc Has Outstanding 10,000 Shares with Par Value of Ten