Three classmates incorporated about a week after graduation.The authorized capital was 500 000 common no-par-value shares.Each took one share; each was a director.If the directors decide to issue more shares from the treasury to raise more capital,which of the following provisions ensures that they keep their proportionate holdings?

Question

Quizplus · Accepted Answer

The pre-emptive right provision allows existing shareholders to maintain their proportionate ownership in the company when new shares are issued. It gives them the right to purchase new shares before they are offered to the general public. This ensures that the three classmates will keep their proportionate holdings if the directors decide to issue more shares from the treasury to raise more capital.

Three Classmates Incorporated About a Week After Graduation