Texas Business Organizations Code

§ 21.204 — STATUTORY PREEMPTIVE RIGHTS

BO § 21.204Title 2. CORPORATIONS · Ch. 21. FOR-PROFIT CORPORATIONS · Art. E. SHAREHOLDER RIGHTS AND RESTRICTIONS

Statute text

(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.

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Legislative history

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