If a ﬁrm's articles of incorporation contain ___________, the ﬁrm is required to complete all seasoned equity sales via a rights offering.

Question

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A preemptive right is a provision in a firm's articles of incorporation that gives existing shareholders the right to purchase additional shares of a new issue in order to maintain their proportional ownership. If a firm has a preemptive right provision in its articles of incorporation, it must complete all seasoned equity sales via a rights offering, which allows existing shareholders to purchase the new shares before they are offered to the public. This ensures that existing shareholders have the opportunity to maintain their proportional ownership in the company.

If a ﬁRm's Articles of Incorporation Contain ___________, the ﬁRm