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.

What is the purpose of pre-emption right?

Definition. Right of existing shareholders in a corporation to purchase newly issued stock before it is offered to others. The right is meant to protect current shareholders from dilution in value or control. Preemptive rights, if recognized, are usually set forth in the corporate charter.

What is pre-emption how it is exercised?

pre-emption has to be exercised, in case of a sale, within one year from the. date of sale and if the sale is not by a registered deed, on the purchaser. taking the physical possession of any part of the property sold.