The Vermont Statutes Online

Title 11A : Vermont Business Corporations

Chapter 006 : Shares and Distributions

Subchapter 003 : Subsequent Acquisition of Shares

• § 6.30. Shareholders’ preemptive rights

  (a) The shareholders of a corporation do not have a preemptive right to acquire the corporation’s unissued shares unless the articles of incorporation contain a statement that “the corporation elects to have preemptive rights,” or words of similar import.

  (b) A corporation electing to have preemptive rights may include in its articles of incorporation a statement prescribing the type and extent of preemptive rights granted to the shareholders. The statement may include, modify, or exclude any of the terms provided under subdivisions (1) through (6) of this subsection. If the articles of incorporation of a corporation electing to have preemptive rights do not include a statement prescribing the preemptive rights, the following terms shall apply:

  (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 his or her 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 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 affiliates;

  (C) shares authorized in articles of incorporation that are issued within six months from the effective date of incorporation;

  (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 year after being offered to shareholders at a 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.

  (c) For purposes of this section, “shares” include a security convertible into or carrying a right to subscribe for or acquire shares. (Added 1993, No. 85, § 2, eff. Jan. 1, 1994.)