While incorporating, the future owners of the corporation want to restrict stock transferability to ensure that existing shareholders have the right to buy any shares of stock offered for sale by a shareholder within a specified time period. The right they should establish in their corporate bylaws is referred to as the ________

Question

Quizplus · Accepted Answer

The correct term is "Right of first refusal." This right allows existing shareholders the opportunity to buy shares before the shareholder can sell them to someone else, ensuring that they can maintain their proportionate ownership in the corporation if they choose.

While Incorporating, the Future Owners of the Corporation Want to Restrict