Corporate Shareholder Preemptive-Rights Requirements in Montana

At a glance

Requirements one by one

The articles must opt in

Montana Code Annotated § 35-14-630(1) starts with no shareholder preemptive right in unissued shares unless the articles provide one. A statement that the corporation elects to have preemptive rights activates subsection (2)'s rules, except where the articles expressly provide otherwise.

The elected system covers unissued shares and treats “shares” as including a security convertible into or carrying a right to subscribe for or acquire shares (§ 35-14-630(3)). It gives proportional amounts on uniform board- prescribed terms designed to provide a fair and reasonable exercise opportunity.

Class limits and four exclusions narrow the offer

A class or series without voting power but with preferential distribution rights has no preemptive right in any class or series. A voting class or series without those preferences ordinarily has no right in preferential shares unless those shares convert into or carry a subscription or acquisition right for nonpreferential shares (§ 35-14-630(2)(d)-(e)).

There is no right for compensation shares, shares satisfying compensation conversion or option rights, article-authorized shares issued within six months after incorporation, or noncash sales (§ 35-14-630(2)(c)). The section does not add a merger-plan or public-offering exclusion.

Waiver and outsider issuance follow different rules

A shareholder may waive the right. A written waiver is irrevocable even without consideration (§ 35-14-630(2)(b)). The statute states no fixed offer content, delivery method, exercise period, or special record date; the board's uniform terms must provide the fair and reasonable opportunity.

Shares left unpurchased may be issued to another person for one year after the shareholder offer, at board-set consideration no lower than the exercise consideration. A lower-price offer or an offer after the year expires is again subject to the shareholders' preemptive rights (§ 35-14-630(2)(f)).

Reacquired shares and amendments require separate checks

Section 35-14-631 says shares acquired by the corporation become authorized but unissued unless the articles prohibit reissue. Reissuable reacquired shares therefore enter Section 35-14-630's unissued-share category.

An amendment limiting or denying an existing right gives the affected class or series a separate vote under § 35-14-1004, even if the articles otherwise call those shares nonvoting. Similarly affected groups vote together unless the articles or board require separation.

The amendment does not automatically create appraisal. Section 35-14-1302(1)(e) provides appraisal for another article amendment only to the extent the articles, bylaws, or a board resolution grants it.

What trips people up

• The articles opt-in can rewrite the statutory package. The shorthand election activates the Model Act rules only to the extent the articles do not expressly provide otherwise.
• The six-month exclusion is narrow. It applies to shares authorized in the articles and issued within six months after incorporation, not every later authorization.
• The outsider window includes a price floor. The one-year window does not permit issuance below the consideration offered through the preemptive right.

Common questions

Do Montana shareholders automatically receive preemptive rights?

No. Section 35-14-630(1) requires the articles to provide the right.

Does Montana prescribe how many days a shareholder gets to respond?

No fixed period or delivery method appears in Section 35-14-630. The board's uniform terms must provide a fair and reasonable opportunity to exercise the right.

Are convertible securities included?

Yes. For this section, shares include securities convertible into or carrying a right to subscribe for or acquire shares.

May declined shares be sold to an outsider at a lower price?

Not without a renewed preemptive-right offer. The one-year outsider authority requires consideration no lower than the shareholder exercise consideration.

Statutes and sources

• Mont. Code Ann. § 35-14-630 — article opt-in, allocation, board terms, waiver, exclusions, class limits, outsider issuance, and included securities. Official Montana Code text, accessed August 31, 2026.
• Mont. Code Ann. § 35-14-631 — status of shares acquired by the corporation. Official Montana Code text, accessed August 31, 2026.
• Mont. Code Ann. § 35-14-1004 — affected-class or series voting when an amendment limits or denies an existing right. Official Montana Code text, accessed August 31, 2026.
• Mont. Code Ann. § 35-14-1302(1)(e) — article-, bylaw-, or board-created appraisal for other article amendments. Official Montana Code text, accessed August 31, 2026.