Subject to any provisions in respect thereof set forth in its articles of incorporation, a corporation may create and issue, whether or not in connection with the issuance and sale of any of its shares or other securities, rights or options entitling the holders thereof to purchase from the corporation shares of any class or classes. Such rights or options shall be evidenced in the manner approved by the board of directors and, subject to the provisions of the articles of incorporation, shall set forth the terms upon which, the time or times within which and the price or prices at which the shares may be purchased from the corporation upon the exercise of any such right or option. In the absence of fraud in the transaction, the judgment of the board of directors as to the adequacy of the consideration received for the rights or options is conclusive.
History: 1953 Comp., § 51-24-19, enacted by Laws 1967, ch. 81, § 19; 1975, ch. 64, § 9; 1983, ch. 304, § 31; 2001, ch. 200, § 46.
Compiler's notes. — This section is derived from Section 20 of the ABA Model Business Corporation Act.
The 2001 amendment, effective July 1, 2001, deleted the former third sentence, which read "Unless otherwise provided in the articles of incorporation, if the rights or options have been or are to be issued to directors, officers or employees as such of the corporation or of any subsidiary thereof, and not to the shareholders generally, their issuance shall be approved or ratified by the affirmative vote of the holders of a majority of the shares entitled to vote thereon or shall be authorized by and consistent with a plan approved or ratified by such a vote of shareholders.".
The 1983 amendment, effective June 17, 1983, inserted "Unless otherwise provided in the articles of incorporation," at the beginning of the third sentence, inserted "have been or" near the beginning of the third sentence, inserted "or ratified" near the middle of the third sentence, and deleted the former last sentence, which read "The price or prices to be received for any shares having a par value, other than treasury shares to be issued upon the exercise of such rights or options, shall not be less than the par value thereof."
Am. Jur. 2d, A.L.R. and C.J.S. references. — 18B Am. Jur. 2d Corporations §§ 1957 to 1983.
18 C.J.S. Corporations § 122 et seq.
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