Although these rights do not always exist, if they do, shareholders are entitled to buy any new issue of stock in proportion to their holdings. If a person owns 5% of a corporation, then he or she would have the right to buy 5% of newly issued shares. These are:

Question

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Preemptive rights allow shareholders to purchase additional shares in proportion to their existing holdings before the company offers them to the public, maintaining their ownership percentage.

Although These Rights Do Not Always Exist, If They Do