Section 2-208 - Classification or reclassification of unissued stock by board. - Maryland Statutes

§ 2-208. Classification or reclassification of unissued stock by board.
 

(a)  Power in general.-  

(1) If, under a power contained in the charter, the board of directors classifies or reclassifies any unissued stock by setting or changing the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or terms or conditions of redemption, the board shall file articles supplementary for record with the Department. 

(2) The board may not issue any of the stock that is classified or reclassified prior to the time the articles supplementary are effective, as provided in this section. 

(b)  Contents of articles supplementary.- Articles supplementary shall include: 

(1) A description of the stock, including the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption, as set or changed by the board of directors; and 

(2) A statement that the stock has been classified or reclassified by the board of directors under the authority contained in the charter. 

(c)  Execution of articles.- Articles supplementary shall be executed in the manner required by Title 1 of this article. 

(d)  Effective date of articles.- Articles supplementary are effective as of the later of: 

(1) The time the Department accepts the articles for record; or 

(2) The time established under the articles, not to exceed 30 days after the articles are accepted for record. 

(e)  Issuance of stock prior to the effectiveness of the articles supplementary.- Notwithstanding subsection (a)(2) of this section: 

(1) The stock issued by a corporation prior to the time the articles supplementary with respect to the stock are effective shall cease to be voidable as a result of the failure to file the articles supplementary at the time the articles supplementary become effective; and 

(2) A right or liability accrued by reason of the issuance of stock by a corporation prior to the time the articles supplementary with respect to the stock are effective shall be extinguished at the time the articles supplementary become effective, except to the extent that the person having the right or liability has acted detrimentally in reliance on the right or liability solely by reason of issuance of the stock. 
 

[An. Code 1957, art. 23, § 18; 1975, ch. 311, § 2; 1995, ch. 356; 2003, ch. 301.]