II. Issuance of Stock

Question 1

What is an Issuance

Answer 1

• when a corporation sells its own stock
  
  • does not occur when an individual sells stock it owns in the company
• way to raise capital

Question 2

Subscriptions

Answer 2

Written offers to buy stock from corporations

• REVOCATION OF PREINCORPORATION SUBSCRPTIONS: irrevocable for 6 months unless it says otherwise on the stock or the subscribers have agreed to let you revoke
• REVOCATION OF POST-INCORPORATION SUBSCRIPTION: revocable until acceptance (by board)
  
  • meanign their bound when the board accepts the offer

Question 3

Consideration: Form

Answer 3

• Permitted: any tangible or intnagible property or benefit to the corporation. Incldues money (cash or check), notes, contracts for future services, realse of cliam, services already rednered for the corp
• Prhibited: anything not mentioned above but hard to find anything else
  *

Question 4

Consideration: Amoutn/Adequacy

Answer 4

• Board required to determine adequacy
  
  • presumed once the board authorized an issuance even if for less than par
• PAR: minimum issuance price
• NO PAR: means no minimum issuance price. Price set by Board of directors

Question 5

Consideration: Re-acquired stock/treasury stock

Answer 5

• stock previously issued and has been REAQUIRED BY THE CORP.
• becomes authorized but unissued and can then resell it (unless artilces say otherwise)
• if issued, price set by board

Question 6

Preemptive Rights

Answer 6

• Right of an
  
  • EXISTING SHAREHOLDER
  • to MAINTAIN HER PERCENTAGE of ownership
  • by buying stock
  • whenever there is a NEW ISSUANCE of stock
  • for money
• includes sale of re-acquired stock
• has a right to buy the amount of stock necessary to maintain percentage share
• No preemptive rights if the articles are silent
  
  • Exception for STATUTORY CLOSE CORP–preemptive rights exist unless articles say othewise