II. Issuance of Stock

Question 1

What is an Issuance?

Answer 1

When Corp. sells its own stock. (ONLY when Corp. Sells STOCK)

Question 2

Subscriptions

Answer 2

Written offers to buy stock from corporation

Revocation of pre-incorp. subscriptions = IRREVOCABLE for 6 mos.

Post-incorp. are revocable until accepted by the corp. (when the board accepts the offer)

Question 3

Consideration

Answer 3

FORM of Consideration:
-Every state agrees that these are permitted = (1) Money (2) Tangible or intangible property (3) Services already performed for the corp.

-Split authority over 2 other forms = Promissory Notes and Future Services (Some states okay; Some prohibited)

AMOUNT of Consideration:

• Par = Minimum Issuance Price (10K Shares of $3 per = $30K)
• No Par = No Minimum Issuance Price (Board Sets a Price)

Water: 10K shares of $3 par to X for $22 (need $30K). So $8K of water (Directors liable if they knowingly authorized)

Question 4

Treasury Stock

Answer 4

Stock the Company ISSUED and THEN REACQUIRED.

It is considered authorized, and the corp. can then resell it. If it does, the Board sets any issuance price it wants.

Question 5

Pre-Emptive Rights

Answer 5

Pre-Emptive Rights = Rights of an existing SH of common stock to maintain her % of ownership by buying stock whenever there is a new issuance of stock…FOR MONEY…

-If articles silent on pre-emptive rights = SPLIT Yes. No.