Superal Corp. authorized 100,000 shares and issued all of them during its first six months in operation.

Question:

Superal Corp. authorized 100,000 shares and issued all of them during its first six months in operation. Avril purchased 10,000 of the shares (10 percent). Later, Superal reacquired 10,000 of the shares it originally issued. With shareholder approval, Superal has now amended its articles so as to authorize and issue another 100,000 shares. It has also, by a resolution of the board of directors, made plans to reissue the 10,000 shares of treasury stock (the shares reacquired by the corporation). The corporate articles do not include a provision dealing with shareholders’ preemptive rights. Because of her ownership of 10 percent of Superal, Avril claims that she has the preemptive right to purchase 10,000 shares of the new issue and 1,000 shares of the stock being reissued. Discuss her claims.


Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Business Law Text and Cases

ISBN: 978-0324655223

11th Edition

Authors: Kenneth W. Clarkson, Roger LeRoy Miller, Gaylord A. Jentz, F

Question Posted: