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What is subscription privilege

This is the right for current shareholders to maintain their ownership fraction ownership of a company if the company decides to issue further shares in the future. i.e. if shareholder A hold 10% of the shares when the company has 1,000,000 share they have 100,000 shares. If the company decides to issued a further 1,000,000 shares then shareholder A has the right to buy another 100,000 of the shares issued keeping his stake at 10%. This right is only valid if written in the companies documents. Also called subscription privilege or pre-emptive right.

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Term created / updated 2010-09-15 10:41:41

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