What Are Pre Exemption Rights?

A pre-emption right, right of pre-emption, or first option to buy is a contractual right to acquire certain property newly coming into existence before it can be offered to any other person or entity.

What is the meaning of pre-emption rights?

Preemptive rights give a shareholder the opportunity to buy additional shares in any future issue of a company's common stock before the shares are made available to the general public. ... It gives an investor the ability to maintain a certain percentage of ownership in the company as more shares are issued.

Are pre-emption rights valuable?

Pre-emption rights are important as they allow a shareholder to be able to protect themselves from having their shares de-valued by dilution or in a private company to prevent a shareholder from selling or transferring its shares to another party whom they may not wish to be in business with.