Shareholders’ Pre-Emptive Rights

When a corporation, acting through its board of directors, proposes to increase the number of its shares then outstanding, existing shareholders have a variety of rights with respect thereto. For instance, a shareholder has a right that statutory provisions be complied with in the matter of the creation of additional shares; he has a right that there be no overissue of shares; under some circumstances, he has a right that no new shares be created for less than their reasonable sale value; and under other circumstances, he has a right to have offered to him (to subscribe for) a proportion of the proposed shares before such opportunity is offered to others. This article is concerned exclusively with an analysis of this last-mentioned right. Herein this right is designated as a shareholder\u27s pre-emptive right