Texas Business Corporation Act - Article 2.22-1. Shareholders Preemptive Rights
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Art. 2.22-1. Shareholders' Preemptive Rights
A. Except as provided by Section F of this article, the shareholders
of a corporation shall not have a preemptive right to acquire
additional, unissued, or treasury shares of the corporation, or
securities of the corporation convertible into or carrying a right
to subscribe to or acquire shares, except to the extent provided by
the articles of incorporation or by agreement.
B. The articles of incorporation may provide that the shareholders
of a corporation shall have a preemptive right by including a
statement that the corporation "elects to have a preemptive right"
or a similar statement. Section C of this article applies to the
shareholders' preemptive right except as otherwise provided by the
articles of incorporation.
C. (1) If the shareholders of a corporation have a preemptive right
under this article, the shareholders have a preemptive right to
acquire proportional amounts of the corporation's additional
unissued or treasury shares, or securities of the corporation
convertible into or carrying a right to subscribe to or acquire
shares on the decision of the corporation's board of directors to
issue the shares.
(2) Unless otherwise provided in the articles of incorporation, no
preemptive right shall exist with respect to:
(a) shares issued or granted to a director, officer, agent, or
employee of the corporation or a subsidiary or affiliate of the
corporation;
(b) shares issued or granted to satisfy conversion or option rights
created to provide compensation to a director, officer, agent, or
employee of the corporation or a subsidiary or affiliate of the
corporation;
(c) shares authorized in the corporation's articles of
incorporation that are issued not later than the 180th day after the
effective date of the corporation's formation; or
(d) shares sold, issued, or granted by the corporation for
consideration other than money.
(3) Holders of shares of any class or series without general voting
rights but that is preferred as to distributions shall not be
entitled to any preemptive right.
(4) Holders of shares of any class or series with general voting
rights that is not preferred as to distributions shall not be
entitled to any preemptive right to shares of any class or series
that is preferred as to distributions or to any obligations, unless
the shares with preferential rights or obligations are convertible
into or carry a right to subscribe to or acquire shares without
preferential rights.
(5) The preemptive right shall be only an opportunity to acquire
shares or other securities under such uniform terms and conditions
as the board of directors may fix for the purpose of providing a
fair and reasonable opportunity for the exercise of such right.
(6) For a one-year period beginning on the date on which the shares
are offered to shareholders, shares subject to preemptive rights
that are not acquired by a shareholder may be issued to a person for
consideration set by the corporation's 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 the period prescribed by this subsection is subject to the
shareholders' preemptive rights.
D. An action may not be brought against the corporation, its
directors, officers, or agents, any holder of shares or securities
of the corporation, or any owner of any beneficial interest in
shares or securities of the corporation on account of any violation
of any preemptive right of a shareholder to acquire any shares of
the corporation, or any securities of the corporation convertible
into or carrying a right to subscribe to or acquire shares, unless
such action is brought within the earlier of:
(1) One year after the date on which written notice is given to each
shareholder whose preemptive right was violated by the issuance,
sale, or other distribution of those shares or securities, which
notice shall be mailed to the shareholder at the address of the
shareholder as it appears on the share transfer records of the
corporation and shall inform the shareholder that the issuance,
sale, or other distribution of those shares or securities was in
violation of the preemptive right of the shareholder; and
(2) Four years after the date on which the corporation issued, sold,
or otherwise distributed those shares or securities or August 28,
1989, whichever is later.
E. In the event of a transfer or other disposition of shares by any
shareholder of a corporation whose preemptive right to acquire
shares of the corporation, or securities of the corporation
convertible into or carrying a right to subscribe to or acquire
shares, shall have been violated, the transferee or successor of
the shareholder shall not acquire the preemptive right, or any
right or claim based on that violation, unless the shareholder
shall have assigned the preemptive right to the transferee or
successor.
F. Subject to the articles of incorporation, shareholders of a
corporation incorporated before September 1, 2003, have a
preemptive right to acquire additional unissued or treasury shares
of the corporation, or securities of the corporation convertible
into or carrying a right to subscribe to or acquire shares, to the
extent provided by Sections C, D, and E of this article. After
September 1, 2003, a corporation may limit or deny the preemptive
right of the shareholders of the corporation by amending the
corporation's articles of incorporation.
G. A shareholder may waive a preemptive right granted to the
shareholder. A written waiver of a preemptive right is irrevocable
regardless of whether the waiver is supported by consideration.
Added by Acts 1973, 63rd Leg., p. 1494, ch. 545, Sec. 13, eff. Aug.
27, 1973. Amended by Acts 1989, 71st Leg., ch. 801, Sec. 9, eff.
Aug. 28, 1989; Acts 1991, 72nd Leg., ch. 901, Sec. 6, eff. Aug. 26,
1991.
Amended by Acts 2003, 78th Leg., ch. 238, Sec. 9, eff. Sept. 1,
2003.
Article: 2.15 2.16 2.18 2.19 2.20 2.21 2.22 2.22-1 2.23 2.24 2.25 2.25-1 2.26 2.27 2.28
Last modified: August 11, 2007
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