Practice question
An existing stockholder demands priority in a new share issuance, arguing that preemptive rights can never be denied or excepted. Which is correct under section 38?
- The right is always absolute
- The right is generally proportionate but may be denied in the articles or amendment and is subject to statutory exceptions
- Only directors can have preemptive rights
- Every new issue automatically cancels all old shares
- Only foreign investors have priority
Legal references
- https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/2/86463 — RA 11232, sections 23, 38, 42, 71, 73 and 74
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