2006 Minnesota Statutes

322B.33 PREEMPTIVE RIGHTS.
    Subdivision 1. Presumption and modification. Unless denied or limited in the articles of
organization, a member control agreement, or by the board of governors pursuant to section
322B.40, subdivision 5, clause (2), a member of a limited liability company has the preemptive
rights provided in this section.
    Subd. 2. Definition. A preemptive right is the right of a member to make contributions of a
certain amount or to make a contribution allowance agreement specifying future contributions of
a certain amount before the limited liability company may accept new contributions from other
persons or to make contribution allowance agreements with other persons.
    Subd. 3. When right accrues. A member has a preemptive right whenever the limited
liability company proposes to accept contributions from other persons, or to make contribution
allowance agreements with other persons, pertaining to membership interests of the same series or
class as the series or class owned by the member.
    Subd. 4. Exemptions. Unless otherwise provided in the articles of organization or a member
control agreement, no preemptive rights according to this section arise as to contributions to
be accepted from others or as to contribution allowance agreements to be made with others
when the contribution is:
(1) to be made in a form other than money;
(2) to be made or reflected pursuant to a plan of merger or exchange;
(3) to be made or reflected pursuant to an employee or incentive benefit plan approved at a
meeting by the affirmative vote of the owners of a majority of the voting power of all membership
interests entitled to vote;
(4) to be made pursuant to a previously made contribution allowance agreement; or
(5) to be made or reflected pursuant to a plan of reorganization approved by a court of
competent jurisdiction pursuant to a statute of this state or of the United States.
    Subd. 5. Extent of preemptive right. The extent to which each member may make a new
contribution, or obtain the right to make a new contribution under a contribution allowance
agreement, by exercise of a preemptive right as to any class or series is the ratio that the value
of that member's contributions, as reflected in the required records as pertaining to that class or
series before the contribution, bears to the total value of all members' contributions reflected in
the required records as pertaining to that class or series before the new contribution.
    Subd. 6. Waiver. A member may waive a preemptive right in writing. The waiver is
binding upon the member whether or not consideration has been given for the waiver. Unless
otherwise provided in the waiver, a waiver of preemptive rights is effective only for the proposed
contribution or contribution allowance agreement described in the waiver.
    Subd. 7. Notice. When proposing to accept new contributions, or to make contribution
allowance agreements, with respect to which members have preemptive rights under this section,
the board of governors shall cause notice to be given to each member entitled to preemptive
rights. The notice must be given at least ten days before the date by which the member must
exercise a preemptive right and must contain:
(1) the extent of the member's preemptive right, being:
(i) in the case of a preemptive right to make a contribution, the amount of the contribution
to be made, and
(ii) in the case of a preemptive right to make a contribution allowance agreement, the amount
of the contribution to be allowed under that contribution allowance agreement;
(2) the method used to determine the extent of the member's preemptive right;
(3) the terms and conditions upon which the member may make a contribution or make a
contribution allowance agreement; and
(4) the time within which and the method by which the member must exercise the right.
    Subd. 8. Contribution and participation by others. If a member does not exercise
preemptive rights to make a contribution or to make a contribution allowance agreement, then for
a period not exceeding one year after the date fixed by the board of governors for the exercise
of those preemptive rights and to the extent of the preemptive rights not exercised, the board of
governors may accept contributions or make contribution allowance agreements on terms no less
favorable to the limited liability company than those offered to the member.
    Subd. 9. Modification. If the members of a limited liability company are entitled to
cumulative voting in the election of governors, no amendment to the articles of organization that
has the effect of denying, limiting, or modifying the preemptive rights provided in this section
shall be adopted if the votes of a proportion of the voting power sufficient to elect a governor at an
election of the entire board of governors under cumulative voting are cast against the amendment.
    Subd. 10. Contractual rights. A denial or limitation of preemptive rights otherwise
provided in this section does not limit the power of a limited liability company to grant first
refusal rights, contribution allowance rights, or other rights to make contributions to the limited
liability company to members, persons who have entered into contribution agreements, or other
persons before accepting contributions or making contribution allowance agreements with any
other person.
History: 1992 c 517 art 2 s 34; 1996 c 361 s 17,18; 1997 c 10 art 4 s 10; 1999 c 85 art
2 s 19,20