Corporate Shareholder Preemptive-Rights Requirements in Arkansas

At a glance

Requirements one by one

The first question is which corporation act applies

Under Ark. Code § 4-27-1701, Chapter 27 governs corporations formed after December 31, 1987. An older corporation may irrevocably elect into Chapter 27 by an articles amendment approved by at least two-thirds of every outstanding class. An older corporation that never elects remains under Chapter 26.

That fork selects two very different answers. The modern § 4-27-630(a)-(b)(2) starts with no right unless the articles opt in. The old § 4-26-711(a)-(c) starts with a detailed right unless the articles provide otherwise.

The modern system uses the Model Act package

An election in the articles gives holders proportional amounts of unissued shares on uniform board-prescribed terms designed to provide a fair and reasonable opportunity. A written waiver is irrevocable without consideration.

Under Ark. Code §§ 4-27-630(b)(3)-(c), 4-27-631(a), the four exclusions cover compensation shares, shares satisfying compensation conversion or option rights, article-authorized shares issued within six months, and nonmoney sales. Class limits apply; “shares” includes convertible and subscription/acquisition-right securities; and reacquired shares become authorized but unissued.

Unpurchased shares may be issued to another person for one year at board-set consideration no lower than the holder offer. A lower-consideration or later offer renews the right.

The old system covers more securities and prescribes notice

The old § 4-26-711(c) covers specified cash offerings of authorized or treasury shares, including same-class shares and another class whose voting or dividend rights would adversely affect the holder. It also reaches specified notes, debentures, bonds, convertibles, options, and warrants.

Eligible holders receive amounts proportionate to their holdings, on reasonable director-fixed terms and at a lawful price substantially no less favorable than the outsider price. The exclusions cover original-articles securities issued, sold, or optioned within two years, nonmoney issues, and shares satisfying previously lawful conversion or option rights.

Under § 4-26-711(d)-(e), the board must send first-class mail to each entitled record holder at the books address. The notice states the time, terms, conditions, and apportionment and must be mailed at least ten days before the exercise period expires. Two-thirds of the shares carrying the rights may vote or consent in writing to release them, but the rights return if the securities are not sold within one year.

Modern amendments add class-vote and fair-value protection

Under Ark. Code §§ 4-27-1004 and 4-27-1302(a)(5)(iii), a modern amendment limiting or denying an existing class right triggers a separate class/series vote, including for otherwise nonvoting shares. An amendment that materially and adversely alters or abolishes the holder's preemptive right also creates a right to dissent and obtain fair value.

What trips people up

• “Arkansas corporation” is not one statutory answer. A pre-1988 corporation remains old-code unless it made the irrevocable election.
• Only the old code supplies a ten-day mail rule. The modern act uses fair- opportunity language without a minimum number of days or delivery method.
• Old-code release differs from modern waiver. Old release needs two-thirds of the shares carrying the right and can expire after one year; modern written waiver is holder-specific and irrevocable without consideration.
• Treasury shares are directly covered under the old code. Under the modern act, reacquired shares instead become authorized but unissued.

Common questions

Do shareholders of a newly formed Arkansas corporation automatically have the right?

No. A post-1987 corporation must opt in through its articles under § 4-27-630.

What must an old-code notice say?

It must state the exercise time, purchase terms and conditions, and the apportionment among entitled holders.

Can old-code holders release the rights for one offering?

Two-thirds of the shares carrying the rights may vote or consent to release them, but the rights return if the securities remain unsold after one year.

Does a modern written waiver need consideration?

No. Section 4-27-630(b)(2) makes it irrevocable even without consideration.

Statutes and sources

• Ark. Code §§ 4-27-630 to -631 — modern article election, allocation, waiver, exclusions, class limits, one-year reoffer, included securities, and reacquired-share status. Official 1987 Act 958, accessed August 31, 2026.
• Ark. Code § 4-27-1701 — post-1987 coverage and irrevocable election for an older corporation. Official 1987 Act 958, accessed August 31, 2026.
• Ark. Code § 4-26-711 — old-code coverage, allocation, price, exclusions, first-class-mail notice, release, and reinstatement. Current Arkansas code reproduction, accessed August 31, 2026.
• Ark. Code §§ 4-27-1004 and 4-27-1302(a)(5)(iii) — modern class vote and dissent for a materially adverse preemptive-right amendment. Official 2009 Act 408, accessed August 31, 2026.