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§ 2-203. Consideration

West's Annotated Code of MarylandCorporations and AssociationsEffective: October 1, 2023

West's Annotated Code of Maryland
Corporations and Associations
Title 2. Corporations in General--Formation, Organization, and Operation (Refs & Annos)
Subtitle 2. Issuance of Securities
Effective: October 1, 2023
MD Code, Corporations and Associations, § 2-203
§ 2-203. Consideration
Currentness
Resolution
(a) Before the issuance of stock or convertible securities, the board of directors shall adopt a resolution that:
(1) Authorizes the issuance;
(2) Sets the minimum consideration for the stock or convertible securities or a formula for its determination; and
(3) Fairly describes any consideration other than money.
Minimum consideration
(b) In the absence of actual fraud in the transaction, the minimum consideration stated in the charter or determined by the board of directors in its resolution is conclusive for all purposes.
Consideration for stock issued as a stock dividend
(c) For purposes of this section, the consideration for stock issued as a stock dividend is the resulting capitalization of surplus.
Application
(d) This section does not apply to the issuance of stock or convertible securities as part of:
(1) A reclassification of stock effected by amendment of the charter; or
(2) A consolidation, merger, share exchange, or conversion, including a consolidation, merger, share exchange, or conversion to which a wholly owned subsidiary of the corporation is a party.
Consideration less than par value
(e) If its issuance is authorized in accordance with this subtitle, stock with par value and securities convertible into stock with par value may be issued as full paid and nonassessable even if the price or value of the consideration received is less than the par value of the stock issued or the stock into which the securities are convertible.
Stock issuance without consideration
(f) Notwithstanding any other provision of this section or § 2-204 or § 2-206 of this subtitle, a corporation may issue stock or other securities of the corporation pursuant to § 2-103(13) of this title without consideration of any kind.

Credits

Added by Acts 1975, c. 311, § 2, eff. July 1, 1975. Amended by Acts 1976, c. 567, § 2; Acts 1999, c. 395, § 1, eff. Oct. 1, 1999; Acts 1999, c. 459, § 1, eff. Oct. 1, 1999; Acts 1999, c. 459, § 2, eff. Oct. 1, 1999; Acts 2000, c. 642, § 1, eff. June 1, 2000; Acts 2001, c. 29, § 1, eff. April 10, 2001; Acts 2023, c. 560, § 1, eff. Oct. 1, 2023.
Formerly Art. 23, §§ 20, 22.
MD Code, Corporations and Associations, § 2-203, MD CORP & ASSNS § 2-203
Current through legislation effective through April 9, 2023, from the 2024 Regular Session of the General Assembly. Some statute sections may be more current, see credits for details.
End of Document