§ 7-106-202 — Issuance of shares

Colorado § 7-106-202

• Jurisdiction: Colorado
• Title 07: Corporations
• Art.: Shares and Distributions

Text

(1) The powers granted in this section to the
board of directors may be reserved to the shareholders by the articles of
incorporation.

(2) Subject to the limitations set forth in subsection (5) of this section, 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, and other securities of the corporation.

(3) Before the corporation issues shares, the board of directors shall
determine that the consideration received or to be received for the shares to be
issued is adequate. In the absence of fraud in the transaction, that determination by
the board of directors is conclusive insofar as the adequacy of such consideration
relates to whether the shares are validly issued, fully paid, and nonassessable.

(4) When the corporation receives the consideration for which the board of
directors has authorized the issuance of shares, the shares issued therefor are fully
paid and nonassessable.

(5) The promissory note of a subscriber or an affiliate of the subscriber for
shares shall not constitute consideration for the shares unless the note is
negotiable and is secured by collateral, other than the shares, having a fair market
value at least equal to the principal amount of the note. For the purposes of this
subsection (5), promissory note means a negotiable instrument on which there is
an obligation to pay independent of collateral and does not include a nonrecourse
note.

(6) Unless otherwise expressly provided in the articles of incorporation or
bylaws, shares having a par value may be issued for less than the par value.

Legislative History

Source: L. 93: Entire article added, p. 756, � 1, effective July 1, 1994.