Preemptive Rights

Preemptive Rights are shareholders’ rights to purchase a proportionate share of new securities issued by a company, allowing them to maintain their ownership percentage and avoid dilution. In venture financing documents, Preemptive Rights are often granted to major investors (similar to participation/pro rata rights), and Preemptive Rights typically include exceptions for employee equity, strategic issuances, and other excluded securities.

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Ryan Roberts Startup Lawyer
Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration.