Form with which a corporation advises that it has resolved that some shareholders shall be required to give the corporation the opportunity to purchase shares before selling them to another.
In California, the Corporate Right of First Refusal (ROAR) refers to a legal mechanism that grants a corporation the opportunity to purchase or acquire a shareholder's shares before they can be sold or transferred to a third party. This right is typically established through corporate resolutions, which are formal decisions made by the company's board of directors or shareholders. The ROAR serves as a protective measure for corporations by allowing them to maintain control over their ownership structure and ensure that shares are not transferred to unwanted or incompatible shareholders. By exercising this right, a corporation can retain the ability to manage its affairs, safeguard its financial interests, and preserve its overall business objectives. There are different types of California Corporate Right of First Refusal — Corporate Resolutions that can be implemented based on the specific needs and preferences of the corporation. These may include: 1. Standard ROAR: This type of resolution grants the corporation the first opportunity to purchase the shares being offered for sale by a shareholder. If the corporation decides to exercise its right, it can buy the shares at a mutually agreed-upon price, usually determined through a fair valuation process. 2. ROAR with Matching Rights: With this resolution, the corporation not only has the right to purchase the shares first but also has the option to match any third-party offers received by the selling shareholder. By having the ability to match competing offers, the corporation can ensure that it remains the preferred buyer and retains control over its ownership structure. 3. General ROAR: This resolution allows the corporation to exercise its right of first refusal not only in cases of a shareholder's intended sale or transfer but also in other situations such as gifting or inheriting shares. This broadens the scope of the ROAR and ensures that the corporation has the chance to acquire shares in various scenarios. The implementation of a California Corporate Right of First Refusal — Corporate Resolution requires careful drafting, review, and approval by the company's legal counsel, board of directors, and shareholders. It is essential to consider the specific legal requirements and nuances of California corporate law to ensure the enforceability and effectiveness of the ROAR provision. Overall, the California Corporate Right of First Refusal — Corporate Resolution acts as a powerful tool for corporations to maintain control over their ownership and protect their long-term interests. It serves as a preventative measure against unwanted transfers of shares and facilitates the preservation of a corporation's strategic vision and objectives.
