Pre-emption rights give existing shareholders in a company the right to subscribe for their pro rata share of any new shares in that company issued for cash, providing them with protection against inappropriate dilution of their investments.
Pre-emption rights are very important. The rules that govern how listed companies behave say that, unless you agree otherwise, companies can’t issue stock to new investors without offering it to existing shareholders first (pro-rata in proportion to the size of your investment). These are pre-emption rights.
For investment companies, pre-emption rights wouldn’t matter if any new shares were being issued at a premium to asset value, as the excess paid over asset value benefits the whole fund (although really big shareholders might worry about a reduction in their voting rights). However, issuing new shares at a discount transfers part of the value of your investment to the new investor – not something an existing shareholder would be happy about.