§ 7-1.2-613 - Shareholder's preemptive rights.
SECTION 7-1.2-613
§ 7-1.2-613 Shareholder's preemptiverights. – (a) Except to the extent limited or denied by this section or by the articlesof incorporation, shareholders of a corporation incorporated prior to July 1,2005 have a preemptive right to acquire unissued shares or securitiesconvertible into shares or carrying a right to subscribe to or acquire shares.Unless otherwise provided in the articles of incorporation:
(1) No preemptive right exists:
(i) To acquire any shares issued to directors, officers, oremployees pursuant to approval by the affirmative vote of the holders of amajority of the shares entitled to vote on the acquisition or when authorizedby and consistent with a plan previously approved by a vote of shareholders; or
(ii) To acquire any shares sold other than for money.
(2) Holders of shares of any class that is preferred orlimited as to dividends or assets are not entitled to any preemptive right.
(3) Holders of shares of any class are not entitled to anypreemptive right to shares of any class that is preferred or limited as todividends or assets or to any obligations, unless convertible into shares ofthat class or carrying a right to subscribe to or acquire shares of that class.
(4) Holders of shares without voting power have no preemptiveright to shares with voting power.
(5) The preemptive right is only an opportunity to acquireshares or other securities under terms and conditions that the board ofdirectors may fix for the purpose of providing a fair and reasonableopportunity for the exercise of the right.
(b) The shareholders of a corporation incorporated on orafter July 1, 2005 do not have a preemptive right to acquire a corporation'sunissued shares or securities convertible into shares or carrying a right tosubscribe for or acquire shares except to the extent the articles ofincorporation so provide. A statement included in the articles of incorporationthat "the corporation elects to have preemptive rights" (or words of similarimport) means that the following principles apply except to the extent thearticles of incorporation expressly provide otherwise:
(1) The shareholders of the corporation have a preemptiveright, granted on uniform terms and conditions prescribed by the board ofdirectors, to provide a fair and reasonable opportunity to exercise the right,to acquire proportional amounts of the corporation's unissued shares upon thedecision of the board of directors to issue them.
(2) A shareholder may waive his or her preemptive right. Awaiver evidenced by a writing is irrevocable even though it is not supported byconsideration.
(3) There is no preemptive right with respect to:
(i) Shares issued as compensation to directors, officers,agents, or employees of the corporation, its subsidiaries or affiliates;
(ii) Shares issued to satisfy conversion or option rightscreated to provide compensation to directors, officers, agents or employees ofthe corporation, its subsidiaries or affiliates;
(iii) Shares authorized in articles of incorporation that areissued within six (6) months from the effective date of incorporation; or
(iv) Shares sold otherwise than for money.
(4) Holders of shares of any class without general votingrights but with preferential rights to distributions or assets have nopreemptive rights with respect to shares of any class.
(5) Holders of shares of any class with general voting rightsbut without preferential rights to distributions or assets have no preemptiverights with respect to shares of any class with preferential rights todistributions or assets unless the shares with preferential rights areconvertible into or carry a right to subscribe for or acquire shares withoutpreferential rights.
(6) Shares subject to preemptive rights that are not acquiredby shareholders may be issued to any person for a period of one year afterbeing offered to shareholders at a consideration set by the board of directorsthat is not lower than the consideration set for the exercise of preemptiverights. An offer at a lower consideration or after the expiration of one yearis subject to the shareholders' preemptive rights.
(c) For purposes of this section, "shares" includes asecurity convertible into or carrying a right to subscribe for or acquireshares.