The preemptive right gives current shareholders the right to purchase, on a pro rata basis, any new shares sold by the firm. This right helps protect them against both dilution of control and dilution of value.

Question

Quizplus · Accepted Answer

The preemptive right does indeed give current shareholders the right to purchase new shares on a pro rata basis, which can protect them against dilution of control and value.

The Preemptive Right Gives Current Shareholders the Right to Purchase