What is the preferential subscription right or maintenance right?
The preferential subscription right is applicable to any stock company (notably SAS and SA). It refers to the right that enables any shareholder to subscribe before anyone else for new shares in the event of a capital increase, i.e. when new shares are issued.
Sometimes, in the event of a capital increase, some shareholders are not able to take part in it financially. In this case, the shareholder is likely to find his holdings diluted. This means that his participation in the share capital of the company has decreased proportionally to the capital increase. The maintenance right (also known as the anti-dilution clause) enables this type of shareholders to take part in the capital increase. The drafting of this clause can anticipate two things.
- The shareholder that benefits from this clause will be able to subscribe for the number of shares that will be sufficient to keep his level of participation in the share capital.
- The shareholder will be able to benefit from his maintenance right and will be able to subscribe for more shares than necessary in order to keep his level of participation in the share capital of the company if the anti-dilution clause provides for the case when the shareholders wants to subscribe for the number of shares in proportion to its share in the company.`
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