Pre-emptive rights allow shareholders to:

Question

Quizplus · Accepted Answer

Pre-emptive rights give existing shareholders the right to buy enough of a new securities offering to maintain their proportional share of ownership in the company. This allows them to avoid dilution of their ownership percentage if new shares are issued. Option B is incorrect because there is usually a limit to the amount of new shares that can be purchased under pre-emptive rights, and they are not always offered at a discount. Option C is incorrect because pre-emptive rights do not pre-empt other shareholders from selling their securities.

Pre-Emptive Rights Allow Shareholders To