The pre-emptive right applies to the issue of new shares by the corporation and is a mechanism that gives existing shareholders the right to purchase their ‘proportionate share’ of the new shares before the shares are offered to others. The purpose of the clause is to enable existing shareholders to maintain their relative percentage holdings. These clauses are only valuable to existing shareholders to the extent that they can afford to continue to purchase the newly issued shares. The process of exercising the pre-emptive right can cause a delay in issuing shares, which can be a problem if the corporation needs to raise funds within a short period of time.