Alabama Constitution Section 234 Restrictions on issuance of corporate stock and bonds
Alabama Constitution – Section 234
Restrictions on Issuance of Corporate Stock and Bonds
Section 234 of the Alabama Constitution places strict limitations on how corporations in the state may issue stock or bonds. Here's a breakdown of the key provisions:
🔒 Key Restrictions:
No Stock or Bond Without Value Given:
Corporations are prohibited from issuing stock or bonds except in exchange for actual money, labor done, or property received.
This means corporations cannot issue stock or bonds as gifts or for no consideration.
Fictitious or Inflated Valuations Prohibited:
Any fictitious increase in the capital stock or indebtedness of a corporation is invalid.
The constitution bars artificially inflating the value of assets or liabilities for the purpose of issuing more stock or debt.
🧾 Purpose of Section 234:
This section is designed to:
Protect investors and the public by ensuring corporate financial integrity.
Prevent fraud and manipulation in corporate accounting and fundraising.
Ensure corporations operate based on real and tangible capital, not inflated or fictional values.
RELATED Blog
0 comments