§ 23-1-27-1 — Preemptive rights

Indiana § 23-1-27-1

• Jurisdiction: Indiana
• Title 23: BUSINESS AND OTHER ASSOCIATIONS
• Art. 1: INDIANA BUSINESS CORPORATION LAW
• Ch. 27: Subsequent Acquisition of Shares by Shareholders and

Text

(a) 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.
(b) A statement included in the articles of incorporation that "the
corporation elects to have preemptive rights" (or words of similar
import) means that the following principles apply except to the extent
the articles of incorporation expressly provide otherwise:
(1) 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.
(2) A shareholder may waive the preemptive right. A waiver
evidenced by a writing is irrevocable even though it is not
supported by consideration.
(3) There is no preemptive right with respect to:
(A) shares issued as compensation to directors, officers, agents,
or employees of the corporation, its subsidiaries, or its
affiliates;
(B) shares issued to satisfy conversion or option rights created
to provide compensation to directors, officers, agents, or
employees of the corporation, its subsidiaries, or its affiliates;
(C) shares authorized in articles of incorporation that are issued
within six (6) months from the effective date of incorporation;
or
(D) shares sold otherwise than for money.
(4) 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.
(5) 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.
(6) Shares subject to preemptive rights that are not acquired by
shareholders may be issued to any person for a period of one (1)
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 (1) year is subject to
the shareholders' preemptive rights.
(c) For purposes of this section, "shares" includes a security
convertible into or carrying a right to subscribe for or acquire shares.

Legislative History

As added by P.L.149-1986, SEC.11.