Preemptive rights of stockholders in corporations organized on or after October 1, 1991.
1. The provisions of this section apply to corporations organized in this State on or after October 1, 1991.
2. The stockholders of a corporation do not have a preemptive right to acquire the corporation’s unissued shares except to the extent the articles of incorporation so provide.
3. A statement included in the articles of incorporation that “the corporation elects to have preemptive rights” or words of similar import have the following effects unless the articles of incorporation otherwise provide:
(a) The stockholders of the corporation have a preemptive right, granted on uniform terms and conditions prescribed by the board of directors to provide a fair and reasonable opportunity to exercise the right, to acquire proportional amounts of the corporation’s unissued shares upon the decision of the board of directors to issue them.
(b) A stockholder may waive his preemptive right. A waiver evidenced by a writing is irrevocable even though it is not supported by consideration.
(c) There is no preemptive right with respect to:
(1) Shares issued as compensation to directors, officers, agents or employees of the corporation, its subsidiaries or affiliates;
(2) Shares issued to satisfy rights of conversion or options created to provide compensation to directors, officers, agents or employees of the corporation, its subsidiaries or affiliates;
(3) Shares authorized in articles of incorporation which are issued within 6 months from the effective date of incorporation; or
(4) Shares sold otherwise than for money.
(d) Holders of shares of any class without general voting rights but with preferential rights to distributions or assets have no preemptive rights with respect to shares of any class.
(e) Holders of shares of any class with general voting rights but without preferential rights to distributions or assets have no preemptive rights with respect to shares of any class with preferential rights to distributions or assets unless the shares with preferential rights are convertible into or carry a right to subscribe for or acquire shares without preferential rights.
(f) Shares subject to preemptive rights that are not acquired by stockholders may be issued to any person for 1 year after being offered to stockholders at a consideration set by the board of directors that is not lower than the consideration set for the exercise of preemptive rights. An offer at a lower consideration or after the expiration of one year is subject to the stockholders’ preemptive rights.
4. As used in this section, “shares” includes a security convertible into or carrying a right to subscribe for or acquire shares.
Last modified: February 26, 2006