Form with which a corporation advises that it has resolved that some shareholders shall be required to give the corporation the opportunity to purchase shares before selling them to another.
The Michigan Corporate Right of First Refusal, also known as Corporate Resolutions, is a legal concept that provides certain rights to corporate shareholders in the state of Michigan. This right allows shareholders to purchase additional shares of stock before they are offered to any outside parties. It ensures that existing shareholders have the first opportunity to maintain or increase their ownership percentage in the company. The Corporate Right of First Refusal is typically included in the Articles of Incorporation or Bylaws of a Michigan corporation. It is an important provision that helps protect the interests of existing shareholders and prevents dilution of their ownership stake. The right ensures that shareholders have a fair chance to participate in any future stock issuance. There are different types of Michigan Corporate Right of First Refusal, including: 1. Pro Rata Right of First Refusal: This type of right allows existing shareholders to purchase additional shares in proportion to their existing ownership percentage. For example, if a shareholder owns 10% of the company, they would have the right to purchase 10% of any newly issued shares. 2. Non-Pro Data Right of First Refusal: In this type of right, existing shareholders have the opportunity to purchase shares at a predetermined price and under specific terms and conditions. This may not be directly proportional to their existing ownership percentage. Both types of Corporate Right of First Refusal are designed to protect the shareholders' interests and provide them with the ability to maintain or increase their ownership position. This ensures that any new shareholders are brought in with the consent and participation of the existing shareholders. It is important for Michigan corporations to clearly outline the specifics of the Corporate Right of First Refusal in their governing documents. This includes details on how the right will be exercised, the timeframe within which shareholders must respond, any restrictions on transferring the right, and the process for determining the purchase price of the shares. In summary, the Michigan Corporate Right of First Refusal, or Corporate Resolutions, grants existing shareholders the privilege to purchase additional shares of stock before they are offered to external parties. It helps protect their ownership percentage and prevents dilution. Pro Rata and Non-Pro Data are two common types of this right, each having its own way of determining the purchase price and terms of the shares. Clarity and specificity in the governing documents are crucial to ensure the smooth exercise of this right.
