Question:-In the absence of restrictive provisions, what are the basic rights of

stockholders of a corporation?
Answer
The fundamental rights of each shareholder (unless restriction to the contrary) are to
share proportionally.
Step-by-Step Solution
Step 1: Definition of restrictive Provision
Restrictive Provision can be expressed as banning, restriction, or further condition
reasonably be anticipated to have a Surviving Corporation Material Adverse Effect.
Step 2: Basic Rights of Stockholders of a corporation
1. The Profit and loss should be shared proportionately
2. Management should be shared proportionately i.e., the voting rights for
directors.
3. Corporate assets upon liquidation should be also shared proportionately.
4. If there is the issue of new stock of the same class should be shared
proportionately, it is called the preemptive right.
Step 3: Conclusion
The first three rights above are intelligible. The last right helps to protect each
stockholder’s proportional interest in the company. The involuntary dilution of
ownership interest of existing stockholders can be protected by the preemptive right.