35-1-535. Shareholders' preemptive rights. (1) The shareholders of a corporation do not have a preemptive right to acquire the corporation's unissued shares except to the extent provided in the articles of incorporation.
     (2) A statement included in the articles of incorporation that "the corporation elects to have preemptive rights", or similar words, means that all of 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 and to acquire proportional amounts of the corporation's issued shares acquired by the corporation pursuant to 35-1-630 upon the decision of the board of directors to convey them.
     (b) A shareholder may waive the shareholder's preemptive right. A waiver evidenced by a writing is irrevocable even though it is not supported by consideration.
     (c) Shareholders of a corporation do not have a preemptive right to acquire proportional amounts of shares with respect to:
     (i) shares issued as compensation to directors, officers, agents, or employees of the corporation, its subsidiaries, or its affiliates;
     (ii) 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;
     (iii) shares authorized in articles of incorporation that are issued within 6 months from the effective date of incorporation; or
     (iv) shares sold otherwise than for money.
     (d) Holders of shares of any class without general voting rights but with preferential rights to distributions or assets do not have preemptive rights with respect to shares of any class.
     (e) Holders of shares of any class with general voting rights but without preferential rights to distributions or assets do not have 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.
     (f) Shares subject to preemptive rights that are not acquired by shareholders may be issued to any person for a period of 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 1 year is subject to the shareholders' preemptive rights.
     (g) Shares acquired by the corporation pursuant to 35-1-630 do not have preemptive rights as long as they are owned by the corporation.
     (3) For purposes of this section, "shares" includes a security convertible into or carrying a right to subscribe for or acquire shares.

     History: En. Sec. 46, Ch. 368, L. 1991; amd. Sec. 1269, Ch. 56, L. 2009.