Court Opinions

State Laws

US Code

US Constitution

Texas Business Organizations Code - Section 21.204. Statutory Preemptive Rights

Legal Research Home > Texas Lawyer > Business Organizations Code > Texas Business Organizations Code - Section 21.204. Statutory Preemptive Rights

§ 21.204. STATUTORY PREEMPTIVE RIGHTS.  (a) If the 
shareholders of a corporation have a preemptive right under this 
subchapter, the shareholders have a preemptive right to acquire 
proportional amounts of the corporation's unissued or treasury 
shares on the decision of the corporation's board of directors to 
issue the shares.  The preemptive right granted under this 
subsection is subject to uniform terms and conditions prescribed by 
the board of directors to provide a fair and reasonable opportunity 
to exercise the preemptive right.
	(b)  No preemptive right exists with respect to:                               
		(1)  shares issued or granted as compensation to a 
director, officer, agent, or employee of the corporation or a 
subsidiary or affiliate of the corporation;
		(2)  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;
		(3)  shares authorized in the corporation's certificate 
of formation that are issued not later than the 180th day after the 
effective date of the corporation's formation;  or
		(4)  shares sold, issued, or granted by the corporation 
for consideration other than money.
	(c)  A holder of a share of a class without general voting 
rights but with a preferential right to distributions of profits, 
income, or assets does not have a preemptive right with respect to 
shares of any class.
	(d)  A holder of a share of a class with general voting rights 
but without preferential rights to distributions of profits, 
income, or assets does not have a preemptive right with respect to 
shares of any class with preferential rights to distributions of 
profits, income, or assets unless the shares with preferential 
rights are convertible into or carry a right to subscribe for or 
acquire shares without preferential rights.
	(e)  For a one-year period after the date the shares have 
been offered to shareholders, shares subject to preemptive rights 
that are not acquired by a shareholder may be issued to a person at a 
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 
shareholder's preemptive rights.

Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.                     

Last modified: August 11, 2007