Question

Liftco gives to all 15,000 of its shareholders the right to purchase newly issued shares of Liftco's stock in proportion to the percentage of shares they currently own and before anyone else is offered the shares. This right is known as .

Answer 1

This right is known as Preemptive Right

Step-by-step explanation:

When a firm provides extra shares of stock to fresh investors then a preemptive right grants a stockholder’s power to manage his ownership interest in an enterprise. In short, the preemptive right is to acquire extra shares is the greatest essential basic shareholder powers in an organization.

In the shareholder’s contract, this right is the basic requirements present. For shareholders, these rights are significant since it is practiced to block fresh investors from subduing the prevailing ownership percentage of subsisting shareholders. Here Liftco issue his existing shareholders to buy a new share based on the Preemptive right.