What are pre-emption rights concerning shares?

Pre-emption rights concerning shares refer to the rights that give existing shareholders the opportunity to purchase additional shares before the company offers them to outside investors. This ensures that current shareholders have the chance to maintain their proportional ownership in the company and prevent dilution of their shares.

The correct answer highlights that these rights specifically allow shareholders to be offered new shares first. This is crucial as it provides them a priority claim to buy shares, based on the principle that they should have the chance to buy into the company at the same terms as new investors before any offering is made publicly.

Understanding this aspect of pre-emption rights is significant because it safeguards the interests of existing shareholders, promoting fairness in the share issuance process. It also supports retention of control within the current shareholder base, as they can prevent their ownership percentage from decreasing if new shares are issued.