13.1-642 - Subscription for shares before incorporation.
§ 13.1-642. Subscription for shares before incorporation.
A. A subscription for shares entered into before incorporation is irrevocablefor six months unless the subscription agreement provides otherwise or allthe subscribers agree to revocation.
B. The board of directors may determine the payment terms of subscriptionsfor shares that were entered into before incorporation, unless thesubscription agreement specifies them. A call for payment by the board ofdirectors must be uniform so far as practicable as to all shares of the sameclass or series, unless the subscription agreement specifies otherwise.
C. Shares issued pursuant to subscriptions entered into before incorporationare fully paid and nonassessable when the corporation receives theconsideration specified in the subscription agreement.
D. If a subscriber defaults in payment of money or property under asubscription agreement entered into before incorporation, the corporation maycollect the amount owed as any other debt. The articles of incorporation,bylaws or the subscription agreement may prescribe other penalties fornonpayment but a subscription and the installments already paid on it may notbe forfeited unless the corporation demands the amount due by written noticeto the subscriber and it remains unpaid for at least 20 days after theeffective date of the notice.
E. If a subscription for unissued shares is forfeited for nonpayment undersubsection D, the corporation may sell the shares subscribed for. If theshares are sold by reason of any forfeiture for more than the amount due onthe subscription, the corporation shall pay the excess, after deducting theexpense of sale, to the subscriber or the subscriber's representative.
F. A subscription agreement entered into after incorporation is a contractbetween the subscriber and the corporation subject to § 13.1-643.
(Code 1950, §§ 13-98, 13.1-15; 1956, c. 428; 1972, c. 580; 1975, c. 500;1985, c. 522; 2005, c. 765.)