Meaning
Provisions under the General Corporation Law of the State of Delaware empower the board of directors to determine the nature and amount of payment for shares. The delaware dgcl 152 states that the consideration for the issuance of capital stock may consist of cash, tangible or intangible property, or any benefit to the corporation. This statute provides broad discretion to the board in assessing the value of the assets received.
Valuation Finality
Judgment by the directors as to the value of the consideration is conclusive in the absence of actual fraud. This protection under the delaware dgcl 152 prevents disgruntled shareholders from challenging the issuance price unless they can prove intentional misconduct. It stabilizes the capital structure by providing certainty to both the company and the new investors.
Consideration Form
The statute permits the use of promissory notes, future services or other intangible benefits as valid payment for equity.
Board Resolution
Directors must formally approve the terms of the issuance and the value assigned to the non-cash assets. Compliance with the delaware dgcl 152 is documented through board minutes that record the findings regarding the benefit to the firm. This documentation is essential during an audit or a merger transaction.
