CHAPTER 26. ISSUANCE OF SHARES
IC 23-1-26
Chapter 26. Issuance of Shares
IC 23-1-26-1
Subscription agreements
Sec. 1. (a) A subscription for shares entered into beforeincorporation is irrevocable for six (6) months unless thesubscription agreement provides a longer or shorter period or all thesubscribers agree to revocation.
(b) The board of directors may determine the payment terms ofsubscriptions for shares that were entered into before incorporation,unless the subscription agreement specifies them. A call for paymentby the board of directors must be uniform so far as practicable as toall shares of the same class or series, unless the subscriptionagreement specifies otherwise.
(c) Shares issued pursuant to subscriptions entered into beforeincorporation are fully paid and nonassessable when the corporationreceives the consideration specified in the subscription agreement.
(d) If a subscriber defaults in payment of money or property undera subscription agreement entered into before incorporation, thecorporation may collect the amount owed as any other debt.Alternatively, unless the subscription agreement provides otherwise,the corporation may rescind the agreement and may sell the shares ifthe debt remains unpaid more than twenty (20) days after thecorporation sends written demand for payment to the subscriber.
(e) A subscription agreement entered into after incorporation is acontract between the subscriber and the corporation subject tosection 2 of this chapter.
As added by P.L.149-1986, SEC.10.
IC 23-1-26-2
Consideration
Sec. 2. (a) The powers granted in this section to the board ofdirectors may be reserved to the shareholders by the articles ofincorporation.
(b) The board of directors may authorize shares to be issued forconsideration consisting of any tangible or intangible property orbenefit to the corporation, including cash, promissory notes, servicesperformed, contracts for services to be performed, or other securitiesof the corporation.
(c) The corporation may issue shares for such considerationreceived or to be received as the board of directors determines to beadequate. That determination by the board of directors is conclusiveinsofar as the adequacy of consideration for the issuance of sharesrelates to whether the shares are validly issued, fully paid, andnonassessable.
(d) When the corporation receives the consideration for which theboard of directors authorized the issuance of shares, the shares issuedtherefor are fully paid and nonassessable.
(e) The corporation may (but is not required to) place in escrow
shares issued for a contract for future services or benefits or apromissory note, or make other arrangements to restrict the transferof the shares, and may (but is not required to) credit distributions inrespect of the shares against their purchase price, until the servicesare performed, the note is paid, or the benefits received. If theservices are not performed, the note is not paid, or the benefits arenot received, the shares escrowed or restricted and the distributionscredited may be cancelled in whole or in part.
As added by P.L.149-1986, SEC.10. Amended by P.L.133-2009,SEC.16.
IC 23-1-26-3
Shareholder liability
Sec. 3. (a) A purchaser from a corporation of its own shares is notliable to the corporation or its creditors with respect to the sharesexcept to pay the consideration for which the shares were authorizedto be issued (section 2 of this chapter) or specified in the subscriptionagreement (section 1 of this chapter).
(b) Unless otherwise provided in the articles of incorporation, ashareholder of a corporation is not personally liable for the acts ordebts of the corporation except that the shareholder may becomepersonally liable by reason of the shareholder's own acts or conduct.
As added by P.L.149-1986, SEC.10.
IC 23-1-26-4
Share dividends and share splits
Sec. 4. (a) Unless the articles of incorporation provide otherwise,shares may be issued pro rata and without consideration to thecorporation's shareholders or to the shareholders of one (1) or moreclasses or series. An issuance of shares under this subsection may bein the form of a share dividend or a share split, but shall beconsidered a share dividend for purposes of this article.
(b) Shares of one (1) class or series may not be issued as a sharedividend in respect of shares of another class or series unless:
(1) the articles of incorporation so authorize;
(2) a majority of the votes entitled to be cast by the class orseries to be issued approve the issue; or
(3) there are no outstanding shares of the class or series to beissued.
(c) If the board of directors does not fix the record date fordetermining shareholders entitled to a share dividend, it is the datethe board of directors authorizes the share dividend.
As added by P.L.149-1986, SEC.10.
IC 23-1-26-5
Rights, options, or warrants
Sec. 5. (a) A corporation, acting through its board of directors,may create or issue rights, options, or warrants for the purchase ofshares or other securities of the corporation or any successor ininterest of the corporation. The board of directors shall determine the
terms upon which the rights, options, or warrants are issued, theirform and content, and the consideration for which the shares or othersecurities are to be issued. The rights, options, or warrants may beissued with or without consideration, and may (but need not) beissued pro rata.
(b) The terms and conditions of the rights, options, or warrants,including the rights, options, or warrants outstanding on July 1, 2009,may include, without limitation, restrictions or conditions that:
(1) preclude or limit the exercise, transfer, or receipt of therights, options, or warrants by:
(A) a person owning or offering to acquire a specifiednumber or percentage of the outstanding shares or othersecurities of the corporation; or
(B) a transferee of the person described in clause (A); or
(2) invalidate or void the rights, options, or warrants held by theperson described in subdivision (1)(A) or a transferee describedin subdivision (1)(B).
As added by P.L.149-1986, SEC.10. Amended by P.L.133-2009,SEC.17.
IC 23-1-26-6
Certificates; contents; signatures
Sec. 6. (a) Shares may but need not be represented by certificates.Unless this article or another statute expressly provides otherwise,the rights and obligations of shareholders of the same class or seriesof shares are identical whether or not their shares are represented bycertificates.
(b) At a minimum each share certificate must state on its face:
(1) the name of the issuing corporation and that it is organizedunder the law of this state;
(2) the name of the person to whom issued; and
(3) the number and class of shares and the designation of theseries, if any, the certificate represents.
(c) If the issuing corporation is authorized to issue differentclasses of shares or different series within a class, the designations,relative rights, preferences, and limitations applicable to each classand the variations in rights, preferences, and limitations determinedfor each series (and the authority of the board of directors todetermine variations for future series) must be summarized on thefront or back of each certificate. Alternatively, each certificate maystate conspicuously on its front or back that the corporation willfurnish the shareholder this information on request in writing andwithout charge.
(d) Each share certificate:
(1) must be signed (either manually or in facsimile) by at leasttwo (2) officers (or the sole officer, if the corporation has onlyone (1) officer) designated in the bylaws or by the board ofdirectors; and
(2) may bear the corporate seal or its facsimile.
(e) If the person who signed (either manually or in facsimile) a
share certificate no longer holds office when the certificate is issued,the certificate is nevertheless valid.
As added by P.L.149-1986, SEC.10. Amended by P.L.107-1987,SEC.5.
IC 23-1-26-7
Issuance of shares without certificates
Sec. 7. (a) Unless the articles of incorporation or bylaws provideotherwise, the board of directors of a corporation may authorize theissue of some or all of the shares of any or all of its classes or serieswithout certificates. The authorization does not affect shares alreadyrepresented by certificates until they are surrendered to thecorporation.
(b) Within a reasonable time after the issue or transfer of shareswithout certificates, the corporation shall send the shareholder awritten statement of the information required on certificates bysections 6(b) and 6(c) of this chapter, and, if applicable, section 8 ofthis chapter.
As added by P.L.149-1986, SEC.10.
IC 23-1-26-8
Restrictions on transfer or registration of transfer of shares
Sec. 8. (a) The articles of incorporation, bylaws, an agreementamong shareholders, or an agreement between shareholders and thecorporation may impose restrictions on the transfer or registration oftransfer of shares of any class or series of shares of the corporation.A restriction does not affect shares issued before the restriction wasadopted unless the holders of the shares are parties to the restrictionagreement or voted in favor of the restriction.
(b) A restriction on the transfer or registration of transfer of sharesis valid and enforceable against the holder or a transferee of theholder if the restriction is authorized by this section and its existenceis noted conspicuously on the front or back of the certificate or iscontained in the information statement required by section 7(b) ofthis chapter. Unless so noted or contained, a restriction is notenforceable against a person without knowledge of the restriction.
(c) A restriction on the transfer or registration of transfer of sharesis authorized:
(1) to maintain the corporation's status when it is dependent onthe number or identity of its shareholders;
(2) to preserve exemptions under federal or state securities law;or
(3) for any other reasonable purpose.
(d) A restriction on the transfer or registration of transfer of sharesmay, among other things:
(1) obligate the shareholder first to offer the corporation orother persons (separately, consecutively, or simultaneously) anopportunity to acquire the restricted shares;
(2) obligate the corporation or other persons (separately,consecutively, or simultaneously) to acquire the restricted
shares;
(3) require the corporation, the holders of any class of itsshares, or another person to approve the transfer of therestricted shares, if the requirement is not manifestlyunreasonable; or
(4) prohibit the transfer of the restricted shares to designatedpersons or classes of persons, if the prohibition is notmanifestly unreasonable.
(e) For purposes of this section, "shares" includes a securityconvertible into or carrying a right to subscribe for or acquire shares.
As added by P.L.149-1986, SEC.10. Amended by P.L.133-2009,SEC.18.
IC 23-1-26-9
Expenses payable from consideration received for shares
Sec. 9. A corporation may pay the expenses of selling orunderwriting its shares, and of organizing or reorganizing thecorporation, from the consideration received for shares.
As added by P.L.149-1986, SEC.10.