Asked by
Ashlie De Nicola
on Nov 10, 2024
Verified
Three classmates incorporated about a week after graduation. The authorized capital was 500,000 common no-par-value shares. Each took one share and each was a director. If the directors decide to issue more shares from the treasury to raise more capital, which of the following provisions ensures that they keep their proportionate holdings?
A) Pre-emptive right provision
B) Indoor-management rule
C) Derivative-action provision
D) Dissent procedure
E) Relief-from-oppression provision
Pre-Emptive Right Provision
A clause usually found in a company's charter or bylaws that gives existing shareholders the first opportunity to buy new shares before they are offered to the public.
Authorized Capital
The maximum amount of share capital that a company is authorized by its corporate charter to issue to shareholders.
Treasury
A government department responsible for managing the financial resources, including revenue collection and expenditure.
- Recognize pre-emptive rights of shareholders and how they protect shareholders’ interests.
Verified Answer
DL
Learning Objectives
- Recognize pre-emptive rights of shareholders and how they protect shareholders’ interests.