16-10a-621. Issuance of shares.
(1) The powers granted in this section to the board of directors may be reserved to the
shareholders by the articles of incorporation.
(2) The board of directors may authorize the issuance of shares for consideration
consisting of any tangible or intangible property or benefit to the corporation, including cash,
promissory notes, services performed, contracts or arrangements for services to be performed, or
other securities of the corporation. The terms and conditions of any tangible or intangible
property or benefit to be provided in the future to the corporation, including contracts or
arrangements for services to be performed, shall be set forth in writing. However, the failure to
set forth the terms and conditions in writing does not affect the validity of the issuance of any
shares issued for any consideration, or their status as fully paid and nonassessable shares.
(3) Before the corporation issues shares, the board of directors must determine that the
consideration received or to be received for the shares to be issued is adequate. The board of
directors' determination regarding the adequacy of consideration for the issuance of shares is
conclusive for the purpose of determining whether the shares are validly issued, fully paid, and
nonassessable.
(4) 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.
(5) The corporation may place in escrow shares issued in consideration for contracts or
arrangements for future services or benefits or in consideration for a promissory note, or make
other arrangements to restrict the transfer of the shares issued for any such consideration, 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 are received. If specified future services are not
performed, the note is not paid, or the benefits are not received, the shares escrowed or restricted
and the distributions credited may be cancelled in whole or part.
(6) The board of directors may authorize a committee of the board of directors, or an
officer of the corporation, to authorize or approve the issuance or sale, or contract for sale of
shares, within limits specifically prescribed by the board of directors.
Enacted by Chapter 277, 1992 General Session
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Last revised: Thursday, May 28, 2009