What is the extent of the preemptive right of stockholders in a close corporation?
The preemptive right of stockholders in a close corporation is broader than in an ordinary stock corporation (SEC. 101, Revised Corporation Code of the Philippines). In a close corporation, this right shall extend to all stock to be issued, including the reissuance of treasury shares. This comprehensive right applies regardless of the consideration given for the issuance, whether for money, property, personal services, or in payment of corporate debts. This expanded right is designed to enable the original stockholders to strictly maintain their proportional ownership interest, adhering to the fundamental concept of a closely held company, unless the articles of incorporation expressly provide for its denial.
02 November 2025
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