N.Y. Banking Law § 5003: Subscription for shares; time of payment, forfeiture for default

§ 5003. Subscription for shares; time of payment, forfeiture for

default. 1. Unless otherwise provided by the terms of the subscription,

a subscription for shares of a corporation to be formed shall be

irrevocable, except with the consent of all other subscribers or the

corporation, for a period of seven months from its date.

2. A subscription, whether made before or after the formation of a

corporation, shall not be enforceable unless in writing and signed by

the subscriber.

3. Unless otherwise provided by the terms of the subscription,

subscriptions for shares, whether made before or after the formation of

a corporation, shall be paid in full at such time, or in such

instalments and at such times, as shall be determined by the board. Any

call made by the board for payment on subscriptions shall be uniform as

to all shares of the same class or of the same series. If the

superintendent has taken possession of the business and property of the

corporation, all unpaid subscriptions shall be paid at such times and in

such instalments as the superintendent may direct.

4. In the event of default in the payment of any instalment or call

when due, the corporation may proceed to collect the amount due in the

same manner as any debt due the corporation or the board may declare a

forfeiture of the subscriptions. The subscription agreement may

prescribe other penalties, not amounting to forfeiture, for failure to

pay instalments or calls that may become due. No forfeiture of the

subscription shall be declared as against any subscriber unless the

amount due thereon shall remain unpaid for a period of thirty days after

written demand has been made therefor. If mailed, such written demand

shall be deemed to be made when deposited in the United States mail in a

sealed envelope addressed to the subscriber at his last post-office

address known to the corporation, with postage thereon prepaid. Upon

forfeiture of the subscription, if at least fifty percent of the

subscription price has been paid, the shares subscribed for shall be

offered for sale for cash at a price at least sufficient to pay the full

balance owed by the delinquent subscriber plus the expenses incidental

to such sale, and any excess of net proceeds realized over the amount

owed on such shares shall be paid to the delinquent subscriber or to his

legal representative. If no prospective purchaser offers a cash price

sufficient to pay the full balance owed by the delinquent subscriber

plus the expenses incidental to such sale, or if less than fifty percent

of the subscription price has been paid, the shares subscribed for shall

be cancelled and restored to the status of authorized but unissued

shares and all previous payments thereon shall be forfeited to the

corporation and transferred to surplus.