"Preemptive rights" means that
A)existing shareholders can prevent management from issuing additional common stock.
B)common shareholders can "preempt" preferred shareholders for dividends.
C)existing shareholders are guaranteed an opportunity to retain their proportional share of ownership of the firm.
D)management can preempt the right of shareholders to receive dividends if earnings are down.

Question

Quizplus · Accepted Answer

Preemptive rights refer to the right of existing shareholders to maintain their proportional ownership in the company by being offered the first opportunity to purchase additional shares before they are offered to the public. This ensures that the current shareholders are not diluted by new investors and helps protect their investment.

"Preemptive Rights" Means That