(1) The powers granted in this section to the board of directors may be reserved to the shareholders by the articles of incorporation.
Subject to the limitations set forth in subsection (5) of this section, the board ofdirectors may authorize the issuance of shares for consideration consisting of any tangible or intangible property or benefit to the corporation, including cash, promissory notes, services performed, and other securities of the corporation.
Before the corporation issues shares, the board of directors shall determine that theconsideration received or to be received for the shares to be issued is adequate. In the absence of fraud in the transaction, that determination by the board of directors is conclusive insofar as the adequacy of such consideration relates to whether the shares are validly issued, fully paid, and nonassessable.
When the corporation receives the consideration for which the board of directors hasauthorized the issuance of shares, the shares issued therefor are fully paid and nonassessable.
The promissory note of a subscriber or an affiliate of the subscriber for shares shallnot constitute consideration for the shares unless the note is negotiable and is secured by collateral, other than the shares, having a fair market value at least equal to the principal amount of the note. For the purposes of this subsection (5), "promissory note" means a negotiable instrument on which there is an obligation to pay independent of collateral and does not include a nonrecourse note.
Unless otherwise expressly provided in the articles of incorporation or bylaws, shareshaving a par value may be issued for less than the par value.
Source: L. 93: Entire article added, p. 756, § 1, effective July 1, 1994.