§ 28-13-3-2 — Security convertible into or carrying right to subscribe for or acquire shares; election to have preemptive rights; applicable principles

Indiana § 28-13-3-2

• Jurisdiction: Indiana
• Art. 13: CORPORATE GOVERNANCE
• Ch. 3: Preemptive Rights─Reacquisition and Reissue of Shares

Text

(a) For purposes of sections 1 and 2 of this
chapter, "shares" includes a security convertible into or carrying a right
to subscribe for or acquire shares.
(b) A statement included in the articles of incorporation that "the
corporation elects to have preemptive rights" (or similar words) 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 the shares.
(2) A shareholder may waive the preemptive right. A waiver
evidenced by a writing is irrevocable even though the waiver is
not supported by consideration.
(3) There is no preemptive right with respect to any of the
following:
(A) Shares issued as compensation to directors, officers, agents,
or employees of the corporation, the corporation's subsidiaries,
or the corporation's affiliates.
(B) Shares issued to satisfy conversion or option rights created
to provide compensation to directors, officers, agents, or
employees of the corporation, the corporation's subsidiaries, or
the corporation's affiliates.
(C) Shares authorized in the articles of incorporation that are
issued within six (6) months from the effective date of
incorporation.
(D) Shares sold otherwise than for money or promissory notes.
(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 the 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 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.

Legislative History

As added by P.L.14-1992, SEC.163.