Section 2-203 - Price and consideration for stock. - Maryland Statutes

§ 2-203. Price and consideration for stock.
 

(a)  Board resolution.- Before the issuance of stock or convertible securities, the board of directors shall adopt a resolution that: 

(1) Authorizes the issuance; 

(2) Sets the minimum consideration for the stock or convertible securities or a formula for its determination; and 

(3) Fairly describes any consideration other than money. 

(b)  Effect of determination.- In the absence of actual fraud in the transaction, the minimum consideration stated in the charter or determined by the board of directors in its resolution is conclusive for all purposes. 

(c)  Stock dividend.- For purposes of this section, the consideration for stock issued as a stock dividend is the resulting capitalization of surplus. 

(d)  Exception.- This section does not apply to the issuance of stock or convertible securities as part of: 

(1) A reclassification of stock effected by amendment of the charter; or 

(2) A consolidation, merger, or share exchange, including a consolidation, merger, or share exchange to which a wholly owned subsidiary of the corporation is a party. 

(e)  Par value stock issued at less than par as full paid and nonassessable.- If its issuance is authorized in accordance with this subtitle, stock with par value and securities convertible into stock with par value may be issued as full paid and nonassessable even if the price or value of the consideration received is less than the par value of the stock issued or the stock into which the securities are convertible. 

(f)  Issuance without consideration.- Notwithstanding any other provision of this section or § 2-204 or § 2-206 of this subtitle, a corporation may issue stock or other securities of the corporation pursuant to § 2-103(13) of this title without consideration of any kind. 
 

[An. Code 1957, art. 23, §§ 20, 22; 1975, ch. 311, § 2; 1976, ch. 567, § 2; 1999, ch. 395; ch. 459, § 1; 2000, ch. 642; 2001, ch. 29, § 1.]