privileged subscription

privileged subscription definition - business

privileged subscription

The issuance of new stock in which existing stockholders are given preference in purchasing new shares up to the proportion of shares they already own. Thus, an owner of 5% of all the issuing firm's outstanding stock would be permitted to buy up to 5% of the new issue at a special price below the current market price. Compare preemptive right. See also rights offering.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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