TransgenRX is issuing new stock to raise capital. Shareholders of TransgenRX have the right as a shareholder to maintain proportional ownership in the company when new shares are issued. This right is best described as the
A) 50/50 rule.
B) pre-emptive right.
C) fairness in equity rule.
D) proportional ownership rule.

Question

Quizplus · Accepted Answer

Pre-emptive rights allow existing shareholders to purchase additional shares before the new shares are offered to the public, enabling them to maintain their proportional ownership in the company.

TransgenRX Is Issuing New Stock to Raise Capital