Sec. 33-672. Issuance of shares.
Sec. 33-672. Issuance of shares. (a) The powers granted in this section to the board
of directors may be reserved to the shareholders by the certificate of incorporation.
(b) The board of directors may authorize shares to be issued for consideration consisting of any tangible or intangible property or benefit to the corporation, including
cash, promissory notes, services performed, contracts for services to be performed or
other securities of the corporation.
(c) Before the corporation issues shares, the board of directors must determine that
the consideration received or to be received for shares to be issued is adequate. That
determination by the board of directors is conclusive insofar as the adequacy of consideration for the issuance of shares relates to whether the shares are validly issued, fully
paid and nonassessable.
(d) When the corporation receives the consideration for which the board of directors
authorized the issuance of shares, the shares issued therefor are fully paid and nonassessable.
(e) The corporation may place in escrow shares issued for a contract for future
services or benefits or a promissory note, or make other arrangements to restrict the
transfer of the shares, and may credit distributions in respect of the shares against their
purchase price, until the services are performed, the note is paid or the benefits received.
If the services are not performed, the note is not paid or the benefits are not received,
the issuance of the shares escrowed or restricted and the distributions credited may be
rescinded in whole or part. Shares whose issuance have been so rescinded shall return
to being authorized but unissued.
(f) At the time of authorizing the issuance of convertible shares, the corporation
shall provide for and at all times thereafter retain unissued sufficient shares of appropriate classes to satisfy the conversion privileges of all of its issued and outstanding
convertible shares.
(P.A. 94-186, S. 44, 215; P.A. 96-271, S. 36, 37, 254.)
History: P.A. 94-186 effective January 1, 1997; P.A. 96-271 amended Subsec. (a) to replace "articles" of incorporation
with "certificate" of incorporation and amended Subsec. (e) to provide that "the issuance of the shares escrowed or restricted
and the distributions credited may be rescinded" rather than "the shares escrowed or restricted and the distributions credited
may be cancelled" and add provision that shares whose issuance have been so rescinded shall return to being authorized
but unissued, effective January 1, 1997.
Annotation to former section 33-46:
Liability for overvaluation of assets taken for stock. 77 C. 473.
Annotations to former section 33-50:
Subscription establishes stockholder's relation to corporation and obligation to pay installments duly called in. 22 C.
452. Right of subscriber to rescind subscription. 26 C. 316; 29 C. 137; 66 C. 9; 72 C. 658; 73 C. 513; 74 C. 265. Amendment
to charter does not ordinarily affect stockholder's contract of subscription. 38 C. 72. Subscription made by one as "trustee"
for corporation being formed; personal liability. 71 C. 207. Obligation of subscribers for acts of de facto corporation. 72
C. 62. Good will of partnership which corporation succeeds and expense of advertising as payment for stock. Id., 118.
Right to return stock purchased on condition. 73 C. 480. Commissioners to take subscriptions cannot delegate power;
effect of their apportionment. Id., 513. What constitutes subscriber; purpose of provision requiring stock to be full-paid.
83 C. 43. Failure of directors to make prescribed record raises no presumption that stock was paid for in cash. 92 C. 273.
Subscription is due at once unless provision is made for deferred payments. 104 C. 694. Attempt to control corporation
by purchase of majority of stock not in itself unlawful or improper. 106 C. 218. Interest of stockholder in corporation. Id.,
24. Repudiation of subscription for stock which never came into valid existence. Id., 41. Purpose of statute is to protect
those doing business with corporation and who might become creditors. 139 C. 668. Cited. 144 C. 569.
Annotations to former section 33-51:
An implied promise to pay installments arises from stockholder's relation to company, whether he is an original subscriber or receives a certificate as transferee. 12 C. 507; Id., 530; 22 C. 452. Parol conditions annexed to subscription
cannot be shown. 13 C. 173. Subscriptions may be enforced after insolvency of corporation. 16 C. 593. Remedy by sale
of stock held to be cumulative and not to supersede right to enforce payment of subscription. 20 C. 178. Private agreement
limiting subscriber's liability invalid. Id., 186. Estoppel from participating in acts of corporation or receiving dividends
to set up irregularities. 66 C. 9; 72 C. 658; 73 C. 378; 134 U.S. 291. Liability as determined by law of state where incorporated.
73 C. 377; 78 C. 590; 79 C. 163; 212 U.S. 567. Corporation cannot release liability as against creditor but may compromise
bona fide dispute. 73 C. 477. Liability of woman married in 1872 on stock received by inheritance. 86 C. 468. Liability
on subscription to stock of existing corporation; mere promise to subscribe not enough. 89 C. 138. Incorporators cannot
enforce payment of stock subscriptions. 107 C. 220. Cited. 113 C. 125. See note to section 33-348.
Annotations to former section 33-52:
When there is no bad faith on the part of the corporation, one subscriber cannot escape liability because another has
acted in bad faith; but subscriber participating in fraud is estopped to deny subscription. 29 C. 137; 66 C. 9; 72 C. 665; 73
C. 513. Subscription is assignable; acceptance by corporation operates as a novation. 101 C. 291. Contract and liability of
subscriber defined. Id., 291. A corporation may refuse to issue stock when consideration therefor has failed. 139 C. 668.
See note to section 33-348.
Annotation to former section 33-342:
Cited. 185 C. 320.
Annotation to former section 33-348:
Subsec. (f):
See annotation to former section 33-46, above.