§ 490.630 — Shareholders’ preemptive rights

Iowa § 490.630

• Jurisdiction: Iowa
• Title XII: BUSINESS ENTITIES
• Ch. 490: BUSINESS CORPORATIONS

Text

1. The shareholders 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.
2. A statement included in the articles of incorporation that “the corporation elects to
have preemptive rights”, or words of similar effect, means that the following principles apply
except to the extent the articles of incorporation expressly provide otherwise:
a. The shareholders 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 preemptive right may be waived by a shareholder. 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 any of the following:
(1) Shares issued as compensation to directors, officers, employees, or agents of the
corporation, its subsidiaries, or its affiliates.
(2) Shares issued to satisfy conversion or option rights created to provide compensation
to directors, officers, employees, or agents of the corporation, its subsidiaries, or its affiliates.
(3) Shares authorized in the articles of incorporation that are issued within six months
from the effective date of incorporation.
(4) Shares sold otherwise than for cash.
d. Holdersofsharesofanyclassorserieswithoutvotingpowerbutwithpreferentialrights
to distributions have no preemptive rights with respect to shares of any class or series.
e. Holdersofsharesofanyclassorserieswithvotingpowerbutwithoutpreferentialrights
to distributions have no preemptive rights with respect to shares of any class or series with
preferential rights to distributions unless the shares with preferential rights are convertible
into or carry a right to subscribe for or acquire the shares without preferential rights.
f. Shares subject to preemptive rights that are not acquired by shareholders may be issued
to any person for a period of one year after being offered to shareholders 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 shareholders’ preemptive rights.
3. As used in this section, “shares” includes a security convertible into or carrying a right
to subscribe for or acquire shares.