1. A. The board of directors may authorize shares to be issued for consideration consisting of 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.
2. B. Before the corporation issues shares, the board of directors shall 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.
3. C. 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.
4. D. 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 shares escrowed or restricted and the distributions credited may be canceled in whole or part.

History: 1978 Comp., § 53-11-19, enacted by Laws 2001, ch. 200, § 45.

ANNOTATIONS

Repeals and reenactments. — Laws 2001, ch. 200, § 45 repealed 53-11-19 NMSA 1978, as amended by Laws 1983, ch. 304, § 30, and enacted a new section, effective July 1, 2001.

Compiler's notes. — This section is derived from Section 19 of the ABA Model Business Corporation Act.

Stock sales to employees subject to Blue Sky Law. — Sales of corporate stock, either for cash or on credit, to employees of the issuing corporation, are subject to the registration provisions of the Blue Sky Law (now Sections 58-13C-101 to 58-13C-701 NMSA 1978). 1959 Op. Att'y Gen. No. 59-49 (rendered under prior law).

Am. Jur. 2d, A.L.R. and C.J.S. references. — 18 Am. Jur. 2d Corporations § 20; 18A Am. Jur. 2d Corporations §§ 494 to 508.

Bona fide holder of negotiable paper given in payment of a subscription to corporate stock in violation of law, 4 A.L.R. 1330.

Payment of stock subscriptions in good will, 24 A.L.R. 1285.

Pledge of unissued stock to secure payment of debt as within prohibition against issuing stock or bonds except for money paid, labor done, or property actually received, 51 A.L.R. 1134.

Right of corporation itself, in absence of fraud against it, to complain that stock issued as fully paid was based on overvaluation of property, or receipt of less than par value, 56 A.L.R. 396.

Note as consideration for issuance of corporate stock under statute forbidding issuance of stock except for money paid, property received, etc., 58 A.L.R. 708.

Right of corporation to deny validity of stock issued by it in violation of statutory or constitutional provisions respecting receipt of consideration, as against subsequent bona fide purchasers or pledgees for value, 73 A.L.R. 1435.

Statutory requirement respecting payment for stock as applicable to foreign corporations, 8 A.L.R.2d 1185.

Validity of stock option plan under which selected personnel of corporation may acquire stock interest therein, 34 A.L.R.2d 852.

Patent rights, copyrights, trademarks, secret processes, formulas, or the like, as "property" within provisions of law or charter forbidding issuance of corporate stock except for money paid or property received, 37 A.L.R.2d 913.

Construction and effect of constitutional or statutory provisions precluding issuance of corporate stock in consideration of promissory notes, 78 A.L.R.2d 834.

18 C.J.S. Corporations §§ 163 to 171.