Securities (Stock)

Question 1

Valuation

Answer 1

Board of directors must determine the consideration paid for the stock is adequate

Consideration is usually money but can be employment, trade, etc.

Question 2

Par Value Stock

Answer 2

*Can be issued during the process of incorporation

*Corporation is required to receive at least par value (value assigned to stock)

*Par value does not have to be market value, could be nominal

Question 3

Sale of Stock below Par Value

Answer 3

If the Board of Directors issues par value stock for below par value, BoD is liable to the corporations for the difference.

Shareholder that knowingly received par stock for below par value is liable to corporation

Question 4

Federal Causes of Action for Improper Sale of Securities

Answer 4

Rule 10(b)(5) and Section 16(b)