Corporate Shareholder Preemptive-Rights Requirements in Washington
At a glance
| Governing law, entity, holder, security, and issuance scope | RCW 23B.06.300; ordinary domestic corporation; shareholders; unissued shares plus included convertible/subscription securities; Jan. 1, 2020 formation split |
|---|---|
| Opt-in, opt-out, formation-date, and legacy rights | Before Jan. 1, 2020: default right unless articles opt out. On/after that date: no right unless articles opt in (§ 23B.06.300(1)-(2)) |
| Articles, board, agreement, and contractual-right sources | Articles grant, deny, or vary; shorthand election activates subsection (3). Board prescribes uniform terms and outsider consideration; no separate agreement-created source in § 23B.06.300 |
| Covered shares, options, convertibles, treasury shares, and rights | Unissued shares; includes securities convertible into or carrying subscription/acquisition rights; class preference limits apply; no express treasury-share rule (§ 23B.06.300(1),(3)(d),(f)) |
| Allocation, price, terms, and board determination | Proportional amounts on uniform board-prescribed terms providing a fair and reasonable opportunity; board sets outsider consideration, which cannot be lower (§ 23B.06.300(3)(a),(e)) |
| Notice, delivery, exercise deadline, and record date | No specified offer content, delivery method, minimum exercise period, or special record date; uniform board terms must provide a fair and reasonable opportunity (§ 23B.06.300(3)(a)) |
| Cash, noncash, compensation, merger-plan, and other exclusions | Excludes service-provider compensation shares, compensation conversion/option shares, shares issued under the initial financing plan, and nonmoney issuances; no other express exclusion (§ 23B.06.300(3)(c)) |
| Waiver, denial, limitation, amendment, class vote, and cumulative voting | Shareholder may waive; written waiver irrevocable without consideration. Articles may deny or vary; class preference limits apply; § 23B.06.300 states no special amendment or cumulative-voting rule |
| Outside issuance and remedy, securities, fiduciary, and valuation boundaries | Unpurchased shares: outsider issuance within 1 year at no lower consideration; lower price or later offer renews rights. No special remedy in § 23B.06.300; securities, fiduciary, valuation, and damages issues are outside scope |
Requirements one by one
Start with the 2020 formation-date rule
Shareholders of a corporation formed before January 1, 2020 have the statutory right unless the articles provide otherwise. A corporation formed on or after that date starts without the right unless its articles provide one (§ 23B.06.300(1)-(2)).
A shorthand article election activates subsection (3), subject to express article variations. The resulting system gives shareholders proportional amounts of unissued shares on uniform board-prescribed terms designed to provide a fair and reasonable exercise opportunity (§ 23B.06.300(1),(3)(a)).
Apply coverage, class limits, and exclusions
For this section, “shares” includes a security convertible into or carrying a right to subscribe for or acquire shares. Separate voting and distribution- preference rules restrict which classes receive rights in other classes (§ 23B.06.300(3)(d),(f)).
The system excludes service-provider compensation shares, shares satisfying compensation conversion or option rights, shares issued under the corporation's initial financing plan, and nonmoney issuances (§ 23B.06.300(3)(c)).
Handle waiver and later issuance
A shareholder may waive the right, and a written waiver is irrevocable even without consideration, unless the articles provide otherwise (§ 23B.06.300(3)(b)).
Declined shares may be issued to another person within one year at board-set consideration no lower than the shareholder offer. A lower-consideration offer or an offer after the year expires is again subject to preemptive rights (§ 23B.06.300(3)(e)).
What trips people up
The formation-date line is “before January 1, 2020.” A corporation formed on January 1, 2020 is therefore in the general no-right branch, not the legacy default branch (§ 23B.06.300(1)-(2)).
Washington excludes shares issued under the corporation's “initial plan of financing.” Section 23B.06.300 does not replace that phrase with a six-month formation window, so another state's time limit should not be imported.
Common questions
Do Washington shareholders automatically receive preemptive rights?
It depends on formation date and the articles. Pre-2020 corporations default into the right; corporations formed on or after January 1, 2020 default out (§ 23B.06.300(1)-(2)).
Does Washington prescribe how many days a shareholder gets to respond?
No fixed notice or exercise period appears in RCW 23B.06.300. The board's uniform terms must provide a fair and reasonable exercise opportunity.
Are convertible securities included?
Yes. RCW 23B.06.300(3)(f) includes securities convertible into or carrying a right to subscribe for or acquire shares.
Statutes and sources
- Wash. Rev. Code § 23B.06.300(1)-(2) — formation-date defaults and article election. Official Washington Legislature text, accessed August 31, 2026.
- Wash. Rev. Code § 23B.06.300(3)(a)-(c) — allocation, board terms, waiver, and exclusions. Official Washington Legislature text, accessed August 31, 2026.
- Wash. Rev. Code § 23B.06.300(3)(d)-(e) — class limits and one-year outside issuance. Official Washington Legislature text, accessed August 31, 2026.
- Wash. Rev. Code § 23B.06.300(3)(f) — included convertible and subscription securities. Official Washington Legislature text, accessed August 31, 2026.
Source links
Every statute quoted above, linked, with the date we checked it.
What does Washington law mean for your facts?
You just read the general rule. Ask your own question and see which parts of current Washington law apply to your situation, with citations you can check.
Opens in Ezel Pro.
- Starts from the statutes this survey is built on
- Cites every source it relies on, so you can verify it
- Chat, drafting and research in one workspace