TITLE 7

Corporations, Associations, and Partnerships

CHAPTER 7-1.2

Rhode Island Business Corporation Act

PART 7-1.2-601

Shares Issuance and Distributions

SECTION 7-1.2-613



   § 7-1.2-613  Shareholder's preemptive

rights. –

(a) Except to the extent limited or denied by this section or by the articles

of incorporation, shareholders of a corporation incorporated prior to July 1,

2005 have a preemptive right to acquire unissued shares or securities

convertible into shares or carrying a right to subscribe to or acquire shares.

Unless otherwise provided in the articles of incorporation:



   (1) No preemptive right exists:



   (i) To acquire any shares issued to directors, officers, or

employees pursuant to approval by the affirmative vote of the holders of a

majority of the shares entitled to vote on the acquisition or when authorized

by and consistent with a plan previously approved by a vote of shareholders; or



   (ii) To acquire any shares sold other than for money.



   (2) Holders of shares of any class that is preferred or

limited as to dividends or assets are not entitled to any preemptive right.



   (3) Holders of shares of any class are not entitled to any

preemptive right to shares of any class that is preferred or limited as to

dividends or assets or to any obligations, unless convertible into shares of

that class or carrying a right to subscribe to or acquire shares of that class.



   (4) Holders of shares without voting power have no preemptive

right to shares with voting power.



   (5) The preemptive right is only an opportunity to acquire

shares or other securities under terms and conditions that the board of

directors may fix for the purpose of providing a fair and reasonable

opportunity for the exercise of the right.



   (b) The shareholders of a corporation incorporated on or

after July 1, 2005 do not have a preemptive right to acquire a corporation's

unissued shares or securities convertible into shares or carrying a right to

subscribe for or acquire shares except to the extent the articles of

incorporation so provide. 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 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:



   (i) Shares issued as compensation to directors, officers,

agents, or employees of the corporation, its subsidiaries or 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 affiliates;



   (iii) Shares authorized in articles of incorporation that are

issued within six (6) months from the effective date of incorporation; or



   (iv) 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 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 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.



History of Section.

(P.L. 2004, ch. 216, § 2; P.L. 2004, ch. 274, § 2; P.L. 2005, ch.

120, § 1; P.L. 2005, ch. 130, § 1.)