Comapny law
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
13 April 2012
Equity shares
what is the meaning of right of pre-emption in the matter of fresh issue of capital.
what is the meaning of right of pre-emption in the matter of fresh issue of capital.
13 April 2012
existing shareholders of the company will be given preference over non-members/shareholder to subscribe in fresh issue.
Ajay Mishra
(Expert)
13 April 2012
Hi
In Corporate practice, the most common form of pre-emption right is the right of existing shareholders to acquire new shares issued by a company in a rights issue, a usually but not always public offering. In this context, the pre-emptive right is also called subscription right or subscription privilege.This is the right, but not the obligation, of existing shareholders to buy the new shares before they are offered to the public. In this way, existing shareholders can maintain their proportional ownership of the company, preventing stock dilution.
Other situations in which pre-emption rights are seen to arise are in property developments; parties close to the investors are often given a right of pre-emption in relation to new flats or condominiums within a development.
Overall, pre-emption right is similar to the concept of a call option.
In Corporate practice, the most common form of pre-emption right is the right of existing shareholders to acquire new shares issued by a company in a rights issue, a usually but not always public offering. In this context, the pre-emptive right is also called subscription right or subscription privilege.This is the right, but not the obligation, of existing shareholders to buy the new shares before they are offered to the public. In this way, existing shareholders can maintain their proportional ownership of the company, preventing stock dilution.
Other situations in which pre-emption rights are seen to arise are in property developments; parties close to the investors are often given a right of pre-emption in relation to new flats or condominiums within a development.
Overall, pre-emption right is similar to the concept of a call option.
Message likes :
1 times
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Late Filing Fee Waiver for Q1 Form 144 (Earlier 27Q) – Transition to Income-tax Act, 2025
- GSTR9 Annual Return
- Ito add credit side of bank
- Employee secondment
- Applicability of tax on invoice
- Form 144 TDS Return Validation error
- Positive Balance in RCM Liability/ITC Statement – Commercial Rent RCM – Guidance Required
- Gift to nri relatives resides in usa
- GST ITC as per notification 12/2023- central tax
- Rent agreement of House of deceased person
- Capital gain on commercial property and investment in residential property
- Import of Capital Machine
- FAST DS 26 Undisclosed Foreign Asset Disclosure Scheme 2026
- Regime change
- Tally: Imported bank entries do not show up in manual reconciliation
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- FAST-DS 2026 Under Tax Law - No recourse or support for person declaring via this scheme?
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
- How to pay remaining amount of TDS after due date?
- Resigning a auditor from the company for misconduct
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
