pre-emption rights

A principle, established in company law, according to which any new shares issued by a company must first be offered to the existing shareholders as the legitimate owners of the company. To satisfy this principle a company must write to every shareholder (see rights issue), involving an expensive and lengthy procedure. Newer methods of issuing shares, such as vendor placings or bought deals, are much cheaper and easier to effect, although they violate pre-emption rights. In the USA pre-emption rights have now been largely abandoned but controversy is still widespread in the UK.

Accounting dictionary. 2014.

Look at other dictionaries:

  • pre-emption rights — Where a company proposes to issue new shares, existing shareholders may have the right to be offered a pro rata part of the new shares before they are offered to a new shareholder. The rights are contained either in the Articles of Association or …   Law dictionary

  • pre-emption rights — When a UK company issues new shares, it is obliged by law to give existing shareholders the opportunity to purchase the new shares on a pro rata basis to their existing shareholding in the company. This right is usually implemented by means of a… …   Financial and business terms

  • pre-emption rights — A principle, established in company law, according to which any new shares issued by a company must first be offered to the existing shareholders as the legitimate owners of the company. To satisfy this principle a company must write to every… …   Big dictionary of business and management

  • statutory pre-emption rights — See pre emption rights. Related links pre emption rights Practical Law Dictionary. Glossary of UK, US and international legal terms. www.practicallaw.com. 2010 …   Law dictionary

  • Pre-emption Group Guidelines — Voluntary guidelines produced by representatives of listed companies, investment institutions and corporate finance practitioners. They relate to issues of equity securities for cash other than on a pro rata basis, setting out the extent to which …   Law dictionary

  • Pre-emption right — A pre emption right is a right to acquire certain property in preference to any other person. It usually refers to property newly coming into existence. A right to acquire existing property in preference to any other person is usually referred to …   Wikipedia

  • pre-emption laws — Federal statutes beginning with the Act of September 4, 1841, under which a settler upon public lands of the United States, surveyed and subject to private entry, might acquire title. The pre emption laws differ from the homestead law in that… …   Ballentine's law dictionary

  • rights issue — An issue of shares for cash by a company to its existing shareholders on a basis pro rata to their existing shareholdings. The issue will normally be at a substantial discount to the current share price (usually between 20% and 40% discount). The …   Financial and business terms

  • rights issue — A method by which listed companies on a stock exchange raise new capital, in exchange for new shares. The name arises from the principle of pre emption rights, according to which existing shareholders must be offered the new shares in proportion… …   Accounting dictionary

  • rights issue — A method by which listed companies on a stock exchange raise new capital, in exchange for new shares. The name arises from the principle of pre emption rights, according to which existing shareholders must be offered the new shares in proportion… …   Big dictionary of business and management

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