Several states' constitutions place stricter limits than the MBCA on permissible considerations for issuance of common shares by corporations.Which of the following considerations is permissible under the MBCA but not permissible by such state constitutions?
A)A promoter's preincorporation services worth $25,000,which services were performed prior to incorporation.
B)A gratuitous promise to contribute $35,000 in cash to the corporation.
C)Bonds of another corporation,which bonds are worth $15,000.
D)The president's actual performance of services for the corporation,which services are worth $50,000.

Question

Quizplus · Accepted Answer

Several states' constitutions place stricter limits than the MBCA on permissible considerations for issuance of common shares by corporations.They provide that shares may be issued only for money paid to the corporation,labor done for the corporation,or property actually received by the corporation.As such,a gratuitous promise to contribute $35,000 cash to the corporation will not qualify as a permissible consideration for issuance of common shares under such a rule.

Several States' Constitutions Place Stricter Limits Than the MBCA on Permissible