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 preemptive right provision gives existing shareholders the right to purchase new shares in proportion to their current holdings, ensuring that they can maintain their proportionate ownership if more shares are issued.

Three Classmates Incorporated About a Week After Graduation