Corporate Shareholder Preemptive-Rights Requirements in Kentucky

At a glance

Requirements one by one

Kentucky has a modern election and a separate 1989 legacy branch

For an ordinary corporation, KRS § 271B.6-300(1)-(2)(b) starts with no preemptive right unless the articles provide one. Charter language that the corporation “elects to have preemptive rights” activates subsection (2)'s detailed system, subject to express article variations.

Subsection (4) separately preserves a right for a corporation that existed on January 1, 1989 if its articles on that date did not specifically address preemptive rights. That date-specific test is different from the modern opt-in rule and requires the corporation's historical articles, not merely its current formation record.

The modern system supplies allocation, exclusions, waiver, and reoffer rules

Under § 271B.6-300(2)(a)-(b), the modern elected right covers proportional amounts of unissued shares on uniform board-prescribed terms designed to provide a fair and reasonable exercise opportunity. A shareholder may waive the right; a written waiver is irrevocable even without consideration.

The modern exclusions in § 271B.6-300(2)(c)-(3) cover compensation shares, shares satisfying compensation conversion or option rights, article-authorized shares issued within six months after incorporation, and shares sold otherwise than for money. Subsections (2)(d)-(e) impose class-preference limits, while subsection (3) includes securities convertible into or carrying a right to subscribe for or acquire shares.

Unpurchased shares may be issued to another person for one year at board-set consideration no lower than the shareholder offer. A lower-consideration or later offer becomes subject to the right again (§ 271B.6-300(2)(f)).

The legacy system has different boundaries

The legacy right in § 271B.6-300(4) covers unissued shares and convertible or subscription securities, but its text does not use the modern branch's express proportional formula or one-year reoffer rule. The board instead fixes terms that provide a fair and reasonable opportunity.

Legacy exclusions apply to noncash sales and to director, officer, or employee issuances approved by the required shareholder majority or made under a previously approved plan. Preferred or limited classes, general-voting classes, nonvoting classes, and certain obligations then receive the distinct treatment set out in paragraphs (b)-(d).

An amendment can limit the right, with a protected class vote

Under § 271B.6-300(4)(f), the legacy subsection stops applying to any class after the articles are amended to limit or deny the preemptive rights of any class. For a proposed amendment limiting or denying an existing preemptive right, KRS § 271B.10-040(1)(h) gives the affected class a separate voting group. Affected series receive the parallel protection, and subsection (4) preserves the vote even when the articles label the shares nonvoting.

What trips people up

• Current articles do not answer the entire transition question. The legacy branch asks whether the corporation existed and what its articles said on January 1, 1989.
• The modern and legacy exclusions are not interchangeable. Modern subsection (2) covers agents, subsidiaries, affiliates, and compensation conversion or option rights; legacy subsection (4) instead turns on the specified shareholder approval or approved plan.
• Kentucky sets no numerical exercise period. The statute requires a fair and reasonable opportunity but states no minimum days, offer-delivery method, or special record date.
• The one-year outsider window belongs to the modern elected system. The legacy subsection states no parallel reoffer period.

Common questions

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

No. The modern rule requires the articles to provide the right (§ 271B.6-300(1)-(2)).

Can a written waiver be revoked for lack of consideration?

No. Under § 271B.6-300(2)(b), a written waiver is irrevocable even when it is not supported by consideration.

Are convertible securities included?

Yes. Subsection (3) includes a security convertible into or carrying a right to subscribe for or acquire shares.

May the corporation sell declined shares at a lower price?

Not without renewing the modern preemptive-right process. Subsection (2)(f) makes a lower-consideration offer subject to the shareholders' rights again.

Statutes and sources

• KRS § 271B.6-300(1)-(3) — modern charter election, board terms, proportional allocation, waiver, exclusions, class limits, one-year reoffer, and included securities. Official Kentucky Legislature text, accessed August 31, 2026.
• KRS § 271B.6-300(4) — January 1, 1989 legacy rule, distinct exclusions, class limits, board-set terms, and amendment cutoff. Official Kentucky Legislature text, accessed August 31, 2026.
• KRS § 271B.10-040(1)(h), (2)-(4) — separate class and series vote for an amendment limiting or denying an existing preemptive right. Official Kentucky Legislature text, accessed August 31, 2026.