Question

10. The right of common shareholders to protect their proportionate interest in a corporation by having the fi?

10. The right of common shareholders to protect their proportionate interest in a corporation by having the first opportunity to buy additional proportionate shares of common stock issued by the corporation is called
A. Preemptive right
B. Proxy right
C. Right to call
D. Financial leverage
E. Voting right

4 years ago - 1 answers

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Your Accounting GURU

Common stock is voting stock: To maintain your power and not have it diluted, Preemptive Rights should be a part of the Organization Charter.

You may ask "What is a Preemptive Right"
Here you go!!!

The right of current shareholders to maintain their fractional ownership of a company by buying a proportional number of shares of any future issue of common stock. Most states consider preemptive rights valid only if made explicit in a corporation's charter.

You can also use the following terms subscription privilege or subscription right with your Accounting GURU's permission....

Hey, isn't this a textbook question and shouldn't you be studying this.... I hope you never become the CEO of American Electric Power Company, I would have to sell my shares..

4 years ago