N.Y. Banking Law § 5004: Consideration and payment for shares

§ 5004. Consideration and payment for shares. 1. Consideration for the

issue of shares shall consist of money or (except as otherwise required

by subdivision a of subdivision one of section four thousand four) other

property tangible or intangible, or labor or services actually received

by or performed for the corporation or for its benefit or in its

formation or reorganization, or a combination thereof. In the absence of

fraud in the transaction, the judgment of the board or stockholders, as

the case may be, as to the value of the consideration received for

shares shall be conclusive.

2. Neither obligations of the subscriber for future payments nor

future services shall constitute payment or part payment for shares of a

corporation.

3. Shares may be issued for such consideration, not less than the par

value thereof, as is fixed from time to time by the board.

4. Treasury shares may be disposed of by a corporation on such terms

and conditions as are fixed from time to time by the board.

5. Upon distribution of authorized but unissued shares to

stockholders, that part of the undivided profits or surplus of a

corporation which is concurrently transferred to capital stock shall be

the consideration for the issue of such shares.

6. In the event of a conversion of capital notes, debentures or shares

into shares, or in the event of an exchange of capital notes, debentures

or shares for shares, the consideration for the shares so issued in

exchange or conversion shall be the sum of (a) either the principal sum

of, and accrued interest on, the capital notes or debentures so

exchanged or converted, or the par value of the shares so exchanged or

converted, plus (b) any additional consideration paid to the corporation

for the new shares, plus (c) any undivided profits or surplus

transferred to capital stock in respect of the new shares.

7. Certificates for shares may not be issued until the full amount of

the consideration therefor has been paid.

8. When the consideration for shares has been paid in full, the

subscriber shall be entitled to all the rights and privileges of a

holder of such shares and to a certificate representing his shares, and

such shares shall be fully paid and, subject to sections one hundred

thirteen-a, one hundred thirteen-b, one hundred fourteen, three hundred

five, three hundred five-a, three hundred six, three hundred twenty-two,

three hundred twenty-two-a and three hundred twenty-three of this

chapter, shall be nonassessable.