Issuance of Stock

Question 1

Issuance

Answer 1

When the Corporation sells it’s own stock

Question 2

Subscriptions

Answer 2

Subscriptions = Written offers to buy stock from corporation.

• Irrevocable for 6 months (pre-incorporation).
• Revocable UNTIL acceptance (post-incorporation)
• This is a way for the corporation to raise money.

Question 3

At what point are the corporation and subscriber obligated under a subscription agreement?

Answer 3

When the board accepts the offer

Question 4

Consideration Required for Stock Purchases?

Answer 4

Consideration can be in any form and in any “adequate” amount.

Question 5

Pre-emptive rights

Answer 5

• The right of an existing shareholder to maintain her percentage of ownership by buying stock whenever there is new issuance of stock FOR MONEY (This includes re-acquired stock)
• If the articles are silent on these rights, pre-emptive rights do NOT exist UNLESS the articles create them.
• Exception: Statutory close corporation includes these unless the Articles say they don’t!

Question 6

No par

Answer 6

-No minimum issuance price - BOD sets price