A preemptive right is a provision in the corporate charter or by laws that gives ordinary shareholders the right to purchase on a pro rata basis new issues of ordinary shares.

Question

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A preemptive right grants existing shareholders the right to maintain their ownership percentage in a company by purchasing new shares before they are offered to the general public, usually at a discounted price. This provision is typically included in a company's corporate charter or bylaws.

A Preemptive Right Is a Provision in the Corporate Charter