§ 1525. Stock rights and options.

648 words·~3 min read·/pa/title-15/chapter-15/1525

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

(a)General rule.-- Except as otherwise provided in its articles prior to the creation and issuance thereof, a business corporation may create and issue (whether or not in connection with the issuance of any of its shares or other securities) option rights or securities having conversion or option rights entitling the holders thereof to purchase or acquire shares, option rights, securities having conversion or option rights, or obligations, of any class or series, or assets of the corporation, or to purchase or acquire from the corporation shares, option rights, securities having conversion or option rights, or obligations, of any class or series, owned by the corporation and issued by any other person. Except as otherwise provided in its articles, the shares, option rights, securities having conversion or option rights, or obligations shall be evidenced in such manner as the corporation may determine and may be offered without first offering them to shareholders of any class or classes.

(b)Specifically authorized provisions.-- The securities, contracts, warrants or other instruments evidencing any shares, option rights, securities having conversion or option rights, or obligations of a corporation may contain such terms as are fixed by the board of directors, including, without limiting the generality of such authority:

(1)Restrictions upon the authorization or issuance of additional shares, option rights, securities having conversion or option rights, or obligations.

(2)Provisions for the adjustment of the conversion or option rights price.

(3)Provisions concerning rights or adjustments in the event of reorganization, merger, sale of assets, interest exchange or other fundamental changes.

(4)Provisions for the reservation of authorized but unissued shares or other securities.

(5)Restrictions upon the declaration or payment of dividends or distributions or related party transactions.

(6)Conditions relating to the exercise, conversion, transfer or receipt of such shares, option rights, securities having conversion or option rights, or obligations.

(b.1) Disparate treatment.-- Subsection

(b)does not authorize the inclusion of a condition described in section 2513 (relating to disparate treatment of certain persons) in the case of a corporation that is not a registered corporation described in section 2502(1)(i) (relating to registered corporation status).

(c)Standard of care unaffected.-- The provisions of subsections

(a)and

(b)and section 2513 shall not be construed to effect a change in the fiduciary relationship between a director and a business corporation or to change the standard of care of a director provided for in Subchapter B of Chapter 17 (relating to fiduciary duty).

(d)Pricing and payment.-- The provisions of this subchapter applicable to the issuance and pricing of, and payment for, shares shall be applicable to rights and options except that the rights and options may be issued to representatives of the corporation or any of its affiliates as an incentive to service or continued service with the corporation and its affiliates or for such other purpose and upon such other terms as its directors, who may benefit by their action, approve.

(e)Shares subject to preemptive rights.-- Authorized but unissued shares subject to preemptive rights may be issued and sold pursuant to a plan providing for the issuance of rights or options entitling the holders thereof to purchase shares of the same class or series as the shares subject to such preemptive rights upon the exercise of such rights or options if the plan is approved by the affirmative vote of a majority of the votes cast by the shareholders entitled to exercise such preemptive rights.

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(Dec. 19, 1990, P.L.834, No.198, eff. imd.; Dec. 18, 1992, P.L.1333, No.169, eff. 60 days; Nov. 3, 2022, P.L.1791, No.122, eff. 60 days)

2022 Amendment. Act 122 amended subsecs.

(b)and

(d)and added subsec. (b.1).

1992 Amendment. Act 169 amended subsec. (a).

1990 Amendment. Act 198 amended subsecs.

(c)and (e).

Cross References. Section 1525 is referred to in sections 1530, 2513 of this title.

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