If shareholders are granted a preemptive right they will: a. have priority in the purchase of any newly issued shares. b. be given the choice of receiving dividends either in eash or in additional shares of stock. c. be able to choose the timing and amount of any future dividends. d. be entitled to two votes per share of stock. e. be paid dividends prior to the preferred shareholders during the preemptive period.
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Beyond the Answer
Shareholders with preemptive rights are like VIPs at a concert; they get first dibs on newly issued shares, ensuring they can maintain their ownership percentage and not be diluted by new investors. This right is essential for those who want to keep control over their investments! Real-world, this right can be crucial during funding rounds! For example, when companies issue new shares to attract investors, existing shareholders can purchase additional shares before they hit the market. Imagine a beloved franchise movie releasing extra tickets - loyal fans get a chance to buy before the rest, keeping their favorite seats!
