2023 New York Laws › BNK - Banking › Article 15 - General Provisions Applicable to Banking Stock Corporations, Limited Liability Investment Companies, and Limited Liability Trust Companies › Title 6 - Stockholders › 6021 - Preemptive Rights.

§ 6021. Preemptive rights. 1. As used in this section, the term:
(a)  "Unlimited dividend rights" means the right without limitation as
to amount either to all or to a share  of  the  balance  of  current  or
liquidating  dividends  after  the  payment  of  dividends on any shares
entitled to a preference.
(b) "Equity  shares"  means  shares  of  any  class,  whether  or  not
preferred  as  to  dividends  or  assets,  which have unlimited dividend
rights.
(c) "Voting rights" means the right to vote for the election of one or
more directors, excluding a right so to vote which is dependent  on  the
happening  of  an  event specified in the organization certificate which
would change the voting rights of any class of shares.
(d) "Voting shares" means  shares  of  any  class  which  have  voting
rights.
(e)  "Preemptive  right"  means  the right to purchase shares or other
securities to be issued, as such right is defined in this section.
(f) "New shares or securities" means new equity shares of any class or
any shares or other securities convertible into  equity  shares  of  any
class.
2.  The  preemptive  rights  provided for in subdivision three of this
section shall not apply to new shares or securities of  any  corporation
whose  organization  certificate  is  approved on or after the effective
date  of  this  subdivision,  unless  expressly  provided  for  in   the
organization  certificate  of such corporation, which may incorporate by
reference the preemptive rights set forth in this  section,  or  further
modify such preemptive rights.
3.  Except  as otherwise provided in the organization certificate, and
except as provided in this section, in case of the proposed issuance  by
the corporation of new shares or securities:
(a)  if  the  issuance of the new shares or securities would adversely
affect the unlimited dividend rights of the holders of  existing  equity
shares  of  any  class,  such  holders  shall  have  the  right during a
reasonable time and on reasonable conditions, both to be  fixed  by  the
board,  to purchase such new shares or securities in such proportions as
shall be determined as provided in this section; and
(b) if such new shares or securities are voting shares  of  any  class
and  the issuance of the new shares or securities would adversely affect
the voting rights of the holders of existing shares of any  class,  such
holders  shall have the right during a reasonable time and on reasonable
conditions, both to be fixed by the board, to purchase such  new  shares
or  other  securities  in  such  proportions  as  shall be determined as
provided in this section.
4. The preemptive right provided for  in  subdivision  three  of  this
section  shall  entitle  stockholders having such rights to purchase the
shares or  other  securities  to  be  offered  for  sale  as  nearly  as
practicable  in such proportions as would, if such preemptive right were
exercised, preserve the relative unlimited dividend  rights  and  voting
rights  of such holders and at a price or prices not less favorable than
the price or prices  at  which  such  shares  or  other  securities  are
proposed  to  be  offered  for sale to others, without deduction of such
reasonable expenses of and compensation for the  sale,  underwriting  or
purchase  of  such shares or other securities by underwriters or dealers
as may lawfully be paid by the corporation. In case each of  the  shares
entitling  the  holders thereof to preemptive rights does not confer the
same unlimited dividend right or voting right, the board shall apportion
the shares or  other  securities  to  be  offered  for  sale  among  the
stockholders   having   preemptive  rights  to  purchase  them  in  such
proportions as in the opinion of the board  shall  preserve  as  far  as

practicable  the relative unlimited dividend rights and voting rights of
the holders at the time of such offering. The apportionment made by  the
board  shall,  in the absence of fraud or bad faith, be binding upon all
stockholders.
5.  Unless  otherwise provided in the organization certificate, shares
or other securities offered for sale shall not be subject to  preemptive
rights under subdivisions two and three of this section if they:
(a)  Are  to  be issued by the board to effect a merger or offered for
consideration other than cash;
(b) Are to be issued or subjected to options under section one hundred
forty-a of this chapter;
(c) Are to be issued to satisfy conversion rights theretofore  granted
by the corporation;
(d) Are treasury shares; or
(e)  Are  part  of  the  shares or other securities of the corporation
authorized in its original organization certificate and are issued, sold
or optioned within two years from the date of filing such certificate.
6. Stockholders of record entitled to preemptive rights on the  record
date  fixed  by  the  board  under  section six thousand four, or, if no
record date is fixed, then on the record date determined  under  section
six  thousand four, and no others shall be entitled to the right defined
in this section.
7. The board shall cause to be given to each stockholder  entitled  to
purchase  shares  or other securities in accordance with this section, a
notice directed to him in the manner provided in  section  six  thousand
five  setting  forth  the time within which and the terms and conditions
upon which the stockholder may purchase such shares or other  securities
and  also  the  apportionment  made  of  the right to purchase among the
stockholders entitled to preemptive rights. Such notice shall  be  given
personally  or  by mail at least fifteen days prior to the expiration of
the period  during  which  the  stockholder  shall  have  the  right  to
purchase.  All stockholders entitled to preemptive rights to whom notice
shall have been given as aforesaid shall be deemed conclusively to  have
had a reasonable time in which to exercise their preemptive rights.
8.  Shares or other securities which have been offered to stockholders
having preemptive rights to purchase and which have not  been  purchased
by  them within the time fixed by the board may thereafter, for a period
of not exceeding one year following the expiration of  the  time  during
which  stockholders  might  have  exercised  such  preemptive rights, be
issued or sold to any other  person  or  persons  at  a  price,  without
deduction  of such reasonable expenses of and compensation for the sale,
underwriting or purchase of such shares by underwriters  or  dealers  as
may  lawfully  be  paid  by the corporation, not less than that at which
they were offered  to  such  stockholders.  Any  such  shares  or  other
securities  not  so issued or sold to others during such one year period
shall  thereafter  again  be  subject  to  the  preemptive   rights   of
stockholders.
9.  Except  as  otherwise provided in the organization certificate and
except as provided in this section, no holder of any shares of any class
shall as such holder have any preemptive right  to  purchase  any  other
shares  or  securities  of  any  class  which at any time may be sold or
offered for sale by the corporation.