Issuance of Shares

V.S.A. tit. 11A, ch. 6, subch. 2

in effect

11A V.S.A. § 6.20 Subscription for shares before incorporation

6.20. Subscription for shares before incorporation (a) A subscription for shares entered into before incorporation is irrevocable for six months unless the subscription agreement provides a longer or shorter period or all the subscribers agree to revocation. (b) The board of directors may determine the payment terms of subscriptions for shares that were entered into before incorporation, unless the subscription agreement specifies them. A call for payment by the board of directors must be uniform so far as practicable as to all shares of the same class or series, unless the subscription agreement specifies otherwise. (c) Shares issued pursuant to subscriptions entered into before incorporation are fully paid and nonassessable when the corporation receives the consideration specified in the subscription agreement. (d) If a subscriber defaults in payment of money or property under a subscription agreement entered into before incorporation, the corporation may collect the amount owed as any other debt. Alternatively, and unless the subscription agreement provides otherwise, if the debt remains unpaid more than 20 days after the corporation sends written demand for payment to the subscriber, the corporation may rescind the agreement. (e) A subscription agreement entered into after incorporation is a contract between the subscriber and the corporation subject to section 6.21 of this title. Added 1993, No. 85, § 2, eff. Jan. 1, 1994.

11A V.S.A. § 6.21 Issuance of shares

6.21. Issuance of shares (a) The powers granted in this section to the board of directors may be reserved to the shareholders by the articles of incorporation. (b) The board of directors may authorize shares to be issued for consideration consisting of any tangible or intangible property or benefit to the corporation, including cash, promissory notes, services performed, contracts for services performed, or other securities of the corporation. (c) Before the corporation issues shares, the board of directors must determine that the consideration received or to be received for shares to be issued is adequate. That determination by the board of directors is conclusive insofar as the adequacy of consideration for the issuance of shares relates to whether the shares are validly issued, fully paid, and nonassessable. (d) When the corporation receives the consideration for which the board of directors authorized the issuance of shares, the shares issued therefor are fully paid and nonassessable. No share shall be issued until such share is fully paid. (e) The corporation may place in escrow shares issued for a contract for future services or benefits or a promissory note, or make other arrangements to restrict the transfer of the shares, and may credit distributions in respect of the shares against their purchase price, until the services are performed, the note is paid, or the benefits are received. If the services are not performed, the note is not paid, or the benefits are not received, the shares escrowed or restricted and the distributions credited may be cancelled in whole or part. Added 1993, No. 85, § 2, eff. Jan. 1, 1994; amended 2007, No. 190 (Adj. Sess.), § 86, eff. June 6, 2008.

11A V.S.A. § 6.22 Liability of shareholders

6.22. Liability of shareholders (a) A purchaser from a corporation of its own shares is not liable to the corporation or its creditors with respect to the shares except to pay the consideration for which the shares were authorized to be issued (section 6.21) or specified in the subscription agreement (section 6.20). (b) A shareholder of a corporation is not personally liable for the acts or debts of the corporation except that he or she may become personally liable by reason of his or her own acts or conduct. (c) Any person becoming an assignee or transferee of shares or of a subscription for shares in good faith and without knowledge or notice that the full consideration therefor has not been paid shall not be personally liable to the corporation or its creditors for any unpaid portion of such consideration. (d) An executor, administrator, conservator, guardian, trustee, assignee for the benefit of creditors, or receiver shall not be personally liable to the corporation as a holder of or subscriber to shares of a corporation but the estate and funds in his or her hands shall be liable to the corporation as a holder of or subscriber to the shares of a corporation. (e) No pledgee or other holder of shares as collateral security shall be personally liable as a shareholder. Added 1993, No. 85, § 2, eff. Jan. 1, 1994.

11A V.S.A. § 6.23 Share dividends

6.23. Share dividends (a) Unless the articles of incorporation provide otherwise, shares may be issued pro rata and without consideration to the corporation’s shareholders or to the shareholders of one or more classes or series. An issuance of shares under this subsection is a share dividend. (b) Shares of one class or series may not be issued as a share dividend on shares of another class or series unless: (1) the articles of incorporation so authorize; (2) a majority of the votes entitled to be cast by the class or series to be issued approve the issue; or (3) there are no outstanding shares of the class or series to be issued. (c) If the board of directors does not fix the record date for determining shareholders entitled to a share dividend, it is the date the board of directors authorizes the share dividend. Added 1993, No. 85, § 2, eff. Jan. 1, 1994.

11A V.S.A. § 6.24 Share options

6.24. Share options (a) A corporation may issue rights, options, or warrants for the purchase of shares or other securities of the corporation. The board of directors shall determine: (1) the terms upon which the rights, options, or warrants are issued; and (2) the terms, including the consideration for which the shares or other securities are to be issued. (b) The authorization by the board of directors for the corporation to issue such rights, options, or warrants constitutes authorization of the issuance of the shares or other securities for which the rights, options, or warrants are exercisable. (c) The terms and conditions of such rights, options, or warrants, including those outstanding on the effective date of this section, may include, without limitation, restrictions or conditions that: (1) preclude or limit the exercise, transfer, or receipt of such rights, options, or warrants by any person or persons owning or offering to acquire a specified number or percentage of the outstanding shares or other securities of the corporation or by any transferee or transferees of any such person or persons; or (2) invalidate or void such rights, options, or warrants held by any such person or persons or any such transferee or transferees. Added 1993, No. 85, § 2, eff. Jan. 1, 1994; amended 2007, No. 190 (Adj. Sess.), § 87, eff. June 6, 2008.

11A V.S.A. § 6.25 Form and content of certificates

6.25. Form and content of certificates (a) Shares may but need not be represented by certificates. Unless this title or other statute expressly provides otherwise, the rights and obligations of shareholders are identical whether or not their shares are represented by certificates. (b) At a minimum each share certificate must state: (1) on its face, the name of the issuing corporation and that it is organized under the law of this State; (2) on its face, the name of the person to whom issued; and (3) on its face, the number and class of shares and the designation of the series, if any, the certificate represents; and (4) on its face or on its back, the existence of restrictions on transfers of shares, if any, as provided in section 6.27 of this title. (c) If the issuing corporation is authorized to issue different classes of shares or different series within a class, the following designations, rights, preferences, and limitations shall be summarized on the front or back of each certificate. Alternatively, each certificate may state conspicuously on its front or back that the corporation will furnish the shareholder this information on request in writing and without charge: (1) the designations, relative rights, preferences, and limitations applicable to each class; and (2) the variations in rights, preferences, and limitations determined for each series (and the authority of the board of directors to determine variations in future series); and (3) the corporation’s right, if any, to make distributions pursuant to subdivision 6.40(c)(2) of this title which may impair preferential rights. (d) Each share certificate: (1) must be signed (either manually or in facsimile) by two officers designated in the bylaws or by the board of directors; and (2) may bear the corporate seal or its facsimile. (e) If the person who signed (either manually or in facsimile) a share certificate no longer holds office when the certificate is issued, the certificate is nevertheless valid. Added 1993, No. 85, § 2, eff. Jan. 1, 1994.

11A V.S.A. § 6.26 Shares without certificates

6.26. Shares without certificates (a) Unless the articles of incorporation or bylaws require that shares shall be represented by certificates, the board of directors of a corporation may authorize the issue of some or all of the shares of any or all of its classes or series without certificates. The authorization does not affect shares already represented by certificates until they are surrendered to the corporation. (b) Within a reasonable time after the issue or transfer of shares without certificates, and at least annually thereafter, the corporation shall send the shareholder a written statement of the information required on certificates by subsections 6.25(b) and (c), and, if applicable, section 6.27 of this title. Added 1993, No. 85, § 2, eff. Jan. 1, 1994.

11A V.S.A. § 6.27 Restriction on transfer of shares and other securities

6.27. Restriction on transfer of shares and other securities (a) The articles of incorporation, bylaws, an agreement among shareholders, or an agreement between shareholders and the corporation may impose restrictions on the transfer or registration of transfer of shares of the corporation. A restriction does not affect shares issued before the restriction was adopted unless the holders of such shares agree in writing to the restriction, or voted in favor of the restriction. (b) A restriction on the transfer or registration of transfer of shares is valid and enforceable against the holder or a transferee of the holder if the restriction is authorized by this section and its existence is noted conspicuously on the front or back of the certificate or is contained in the information statement required by subsection 6.26(b) of this title. Unless so noted, a restriction is not enforceable against a person without knowledge of the restriction. (c) A restriction on the transfer or registration of transfer of shares is authorized: (1) to maintain the corporation’s status when it is dependent on the number or identity of its shareholders; (2) to preserve exemptions under federal or state securities law; (3) for any other reasonable purpose. (d) A restriction on the transfer or registration of transfer of shares may: (1) obligate the shareholder first to offer the corporation or other persons (separately, consecutively, or simultaneously) an opportunity to acquire the restricted shares; (2) obligate the corporation or other persons (separately, consecutively, or simultaneously) to acquire the restricted shares; (3) require the corporation, the holders of any class of its shares, or another person to approve the transfer of the restricted shares, if the requirement is not manifestly unreasonable; (4) prohibit the transfer of the restricted shares to designated persons or classes of persons, if the prohibition is not manifestly unreasonable. (e) For purposes of this section, “shares” include a security convertible into or carrying a right to subscribe for or acquire shares. Added 1993, No. 85, § 2, eff. Jan. 1, 1994.

11A V.S.A. § 6.28 Expense of issue

6.28. Expense of issue A corporation may pay the reasonable expenses of selling or underwriting its shares, and of organizing or reorganizing the corporation, from the consideration received for shares. Added 1993, No. 85, § 2, eff. Jan. 1, 1994.

Source: Vermont General Assembly (legislature.vermont.gov)URL: https://legislature.vermont.gov/statutes/chapter/11A/006Fetched: 10/21/2026