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.
Delaware Corporate Right of First Refusal is a legal provision that grants a corporation the opportunity to purchase additional shares of its own stock or any other securities before they are offered to a third party. It is a right granted by the corporation's governing documents, typically its bylaws or articles of incorporation. This right ensures that existing shareholders have the first opportunity to maintain their proportional ownership in the company. The purpose of implementing a Corporate Right of First Refusal in Delaware is to protect the interests of existing shareholders by offering them the chance to purchase any new shares issued by the corporation. It allows shareholders to avoid dilution of their ownership and maintain control over the company. This provision also enables the corporation to retain ownership and avoid any potential adverse effects that may arise from the entry of new or unwanted shareholders. There are different types of Delaware Corporate Right of First Refusal — Corporate Resolutions: 1. Right of First Offer: This type of right provides shareholders with the opportunity to purchase new shares before they are offered to any third party. Once the corporation decides to issue additional shares, it must first offer them to existing shareholders at a predetermined price. Shareholders can choose to accept the offer and purchase the shares or decline, allowing the corporation to offer them to a third party. 2. Right of First Refusal: In this type, when a shareholder intends to sell their shares to a third party, they must first offer them to the corporation before selling them to an external buyer. If the corporation chooses to exercise its right, it can buy the shares at the offered price, preserving the proportional ownership of existing shareholders. Both types of Delaware Corporate Right of First Refusal typically have predefined procedures and timelines, including notification requirements and a specified period within which the corporation must respond to the offer. These provisions protect the interests of both shareholders and the corporation, allowing for a fair and orderly process of share transactions. It is important to note that the exact details and implementation of the Corporate Right of First Refusal may vary depending on the specific language included in a corporation's governing documents. It is advisable for corporations to consult legal counsel to ensure compliance with Delaware corporate law and create appropriate resolutions tailored to their specific needs.
