State Codes and Statutes

Statutes > Utah > Title-16 > Chapter-10a > 16-10a-630

16-10a-630. Shareholders' preemptive rights.
(1) Subject to the provisions of Subsection 16-10a-1704(3), the shareholders of acorporation do not have a preemptive right to acquire the corporation's unissued shares except tothe extent the articles of incorporation so provide.
(2) A statement included in the articles of incorporation that "the corporation elects tohave preemptive rights," or words of similar import, means that the following principles applyexcept to the extent the articles of incorporation expressly provide otherwise:
(a) Upon the decision of the board of directors to issue shares, the shareholders of thecorporation have a preemptive right, subject to any uniform terms and conditions prescribed bythe board of directors, to provide a fair and reasonable opportunity to exercise the right, toacquire a number of the shares proposed to be issued in an amount proportional to theirpercentage ownership of the corporation's outstanding shares.
(b) A shareholder may waive a preemptive right. A waiver evidenced by a writing isirrevocable even though it is not supported by consideration.
(c) There is no preemptive right with respect to:
(i) shares issued as compensation for services to directors, officers, agents, or employeesof the corporation, its subsidiaries, or affiliates;
(ii) shares issued to satisfy conversion or option rights created to provide compensationfor services to directors, officers, agents, or employees of the corporation, its subsidiaries, oraffiliates;
(iii) shares issued within six months from the effective date of incorporation; or
(iv) shares sold otherwise than for cash.
(d) Holders of shares of any class without general voting rights but with preferentialrights to distributions have no preemptive rights with respect to shares of any other class.
(e) Holders of shares of any class with general voting rights but without preferentialrights to distributions have no preemptive rights with respect to shares of any class withoutgeneral voting rights but with preferential rights to distributions unless the shares without generalvoting rights but with preferential rights are convertible into or carry a right to subscribe for oracquire shares with general voting rights or without preferential rights.
(f) Shares subject to preemptive rights that are not acquired by shareholders may beissued to any person for a period of one year after being offered to shareholders pursuant to thepreemptive rights, at a consideration set by the board of directors that is not lower than theconsideration set for the exercise of preemptive rights. An offer at a lower consideration or afterthe expiration of the one year period is subject to the shareholders' preemptive rights.
(3) For purposes of this section, "shares" includes a security convertible into or carrying aright to subscribe for or acquire shares.

Enacted by Chapter 277, 1992 General Session