Issuance of Stock Flashcards
Issuance
When corporation sells its own stock (way to raise capital)
Subscriptions
Written offers to buy stock from corporation
Revocation of pre-incorporation subscriptions
Irrevocable for 6 months unless says otherwise or all subscribers agree to let you revoke
Post-incorporation subscriptions
Revocable until accepted by the corporation (aka when Board accepts the offer)
Form of consideration corporation must recieve when it issues stock?
OK in all states:
(1) Money (cash or check)
(2) tangible or intangible property
(3) services already performed for the corporation
Split:
(1) promissory notes
(2) future services
If C Corp is issuing 10,000 shares of $3 per stock, it must receive at least:
$30,000
Par
Minimum issuance price
Treasury Stock
Stock company issued and then reacquired. COnsidered authorized and corporation can resell it at which board can set any issuance price it wants
If corp issues stock in exchange for property or past services, who determines value of property or services adn is evaluation conclusive?
Board. Conclusive if acted in good faith.
Who is liable if C. Corp issues 10,000 shares of $3 par to X for $22,000, and corp wants to recover $8000 of water
- Directors if knowingly authorized issuance
- X (the guy who bought stock)
- 3rd party that X transferred stock to if did not know about the water
Pre-emptive rights
Right of existing shareholder of common stock to maintain her percentage of ownership by buying stock whenever there is a new issuance of stock for money (cash or check)
Split over whether new issuance includes issuance of treasury stock
IF articles are silent, are there pre-emptive rights?
Split between states
C Corp articles provide for pre-emptive rights. You own 20%. C Corp issues stock for Peggy Olson to purchase property from Peggy. Do you have pre-emptive rights
No, b/c not issuance for $, issuance for property
