Issuance of Stock

Question 1

Generally speaking, what must a corporation receive when it issues stock?

Answer 1

Value consideration

Question 2

What does par value mean?

Answer 2

Minimum issuance price for stock (the corp. can’t sell stock for less than this amount).

Question 3

What happens when no par value is designated?

Answer 3

There is no minimum issuance price, and thus any value consideration can be accepted, if deemed adequate by the Board.

Question 4

What is treasury stock?

Is treasury stock deemed to be par value stock?

Answer 4

Stock that was previously issued and had been reacquired by the corporation - it can then be re-sold.

No. It is deemed as no par stock.

Question 5

Is the Board liable if it issues par stock at less than par value?

Answer 5

Yes, for the difference value and the issuance price.

Question 6

Is a third-party liable it it purchases par value stock at less than par value?

Answer 6

Yes - SH liable for paying full consideration for shares.

Question 7

What are preemptive rights?

Answer 7

The right of an existing SH to maintain her percentage of ownership by buying stock whenever there is a new issuance of stock for cash.

Question 8

What is the AoI are silent on preemptive rights?

Answer 8

They do not exist. In VA, preemptive rights must be expressly granted in the AoI