Corporate Shareholder Preemptive-Rights Requirements in New York

At a glance

Requirements one by one

Start with the incorporation-date branch and certificate

Section 622(b)(2) makes the modern branch opt-in: a corporation incorporated on or after that subparagraph's effective date has no shareholder preemptive right unless its certificate expressly provides one. Section 622(i) reinforces that a shareholder has no such right merely because of holder status (§ 622(b)(2), (i)).

An earlier corporation follows a narrower legacy system, subject to its certificate. Equity-share holders receive the right only when the covered issuance would adversely affect their unlimited dividend rights. Voting-share holders must have held the preserved right immediately before the statutory cutoff, and the issuance must adversely affect their voting rights (§ 622(a)-(c)).

What the legacy system covers and how it allocates

The statute reaches corporate issuances and grants of purchase rights or options involving equity or voting shares, convertibles, and securities carrying rights or options to buy those shares (§ 622(a)-(c)). It allocates the offer as nearly as practicable to preserve the qualifying holders' relative unlimited-dividend and voting rights, at a price no less favorable than the outsider price (§ 622(d)).

If holders' shares do not carry identical rights, the board apportions the offer as it believes will preserve those relative rights as far as practicable. That apportionment is binding absent fraud or bad faith (§ 622(d)).

Exclusions, record date, and notice

Unless the certificate provides otherwise, Section 622(e) excludes securities for a merger or consolidation or noncash consideration, compensation rights or options under Section 505(d), securities satisfying previously granted conversion or option rights, treasury shares, original-certificate securities issued within two years, and securities under a federal reorganization plan (§ 622(e)).

Only record holders at the Section 604 record date receive the statutory right. The board's notice must state the exercise time, terms and conditions, and apportionment, be delivered personally or by mail, and arrive at least 15 days before the exercise period expires (§ 622(f)-(g)).

Later issuance to outsiders

After the exercise period ends, unpurchased securities may be issued to another person for no more than one year and at a price not lower than the shareholder offer. If they are not issued during that year, they again become subject to the preemptive rights (§ 622(h)).

What trips people up

The older-corporation branch is not an across-the-board percentage right for every shareholder and every security. It depends on whether the holder has the defined unlimited-dividend or preserved voting right and whether the proposed issuance would adversely affect that right (§ 622(a)-(c)).

Treasury shares are excluded from the legacy system unless the certificate provides otherwise. New York therefore differs from statutes that place treasury and unissued shares in the same default preemptive-right pool (§ 622(e)(4)).

Common questions

Does every New York shareholder automatically get a preemptive right?

No. The modern branch requires an express certificate provision. An earlier corporation requires a separate analysis of the legacy right, the holder's share rights, the proposed issuance, and the current certificate (§ 622(b)-(c)).

How much advance notice does the statute require?

At least 15 days before the exercise period expires. The notice must also state the exercise time, terms and conditions, and the holder's apportionment (§ 622(g)).

Can the corporation later sell the unpurchased securities to an outsider?

Yes, for up to one year after the shareholder exercise period expires and at a price not lower than the shareholder offer. After that year, the securities must pass through the preemptive-right process again (§ 622(h)).

Statutes and sources

• N.Y. Bus. Corp. Law § 622(a)-(c) — definitions, formation-date branches, covered holders and securities, certificate variation, and adverse-effect conditions. Official current New York Senate text, accessed August 31, 2026.
• N.Y. Bus. Corp. Law § 622(d) — allocation, price, board apportionment, and fraud-or-bad-faith boundary. Official current New York Senate text, accessed August 31, 2026.
• N.Y. Bus. Corp. Law § 622(e) — certificate-subject exclusions. Official current New York Senate text, accessed August 31, 2026.
• N.Y. Bus. Corp. Law § 622(f)-(h) — record holder, notice, exercise, and later outside issuance. Official current New York Senate text, accessed August 31, 2026.
• N.Y. Bus. Corp. Law § 622(i) — no holder-status right beyond the section or certificate and the voting-bond default. Official current New York Senate text, accessed August 31, 2026.