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Corporations-Basis For Preemptive Rights

Michigan Law Review

Defendant corporation's authorized capital stock consisted of 800 shares of common stock, 76 shares of which remained unissued. Over the objection of the plaintiff, the directors of the corporation authorized the issue of 50 shares of the 76 to a salesman in satisfaction of a debt due him from the corporation, the remaining 26 shares to one of the directors for cash with which to meet corporate indebtedness. No contest for corporate control was afoot. No opportunity was given to the shareholders generally to purchase such shares. Later the faction of the individual defendants to whom said 26 shares had …