Tex.
Bus. Orgs. Code Section 21.157
Issuance of Shares
(a)
Except as provided by Section 21.158 (Issuance of Shares Under Plan of Merger or Conversion), a corporation may issue shares for consideration if authorized by the board of directors of the corporation. Shares may be issued in one or more transactions in the number, at the time, and for the consideration stated in or determined by the authorization of the board of directors.(b)
Shares may not be issued until the consideration, determined in accordance with this subchapter, has been paid or delivered as required in connection with the authorization of the shares. When the consideration is paid or delivered:(1)
the shares are considered to be issued;(2)
the subscriber or other person entitled to receive the shares is a shareholder with respect to the shares; and(3)
the shares are considered fully paid and nonassessable.(c)
This subsection applies only to shares issued in accordance with Subsections (a) and (b) and Sections 21.160 (Determination of Consideration for Shares) and 21.161 (Amount of Consideration for Issuance of Certain Shares) for consideration consisting, wholly or partly, of a contract for future services or benefits or a promissory note. A corporation may place the shares, although fully paid and nonassessable, in escrow, or make other arrangements to restrict the transfer of the shares, and may credit distributions made with respect to 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 corporation may pursue remedies provided or afforded under law or in the contract or note, including causing the shares that are placed in escrow or restricted to be forfeited or returned to or reacquired by the corporation and the distributions that have been credited to be wholly or partly returned to the corporation.(d)
An authorization of the board of directors may delegate to a person or persons, in addition to the board of directors, the authority to enter into one or more transactions to issue shares. With respect to a transaction entered into by a person or persons to whom authority was delegated under this subsection, shares may be issued in the number, at the time, and for the consideration the person or persons may determine if that authorization of the board of directors:(1)
states:(A)
the maximum number of shares that may be issued under the authorization;(B)
the period of time during which the shares may be issued; and(C)
the minimum amount of consideration for which the shares may be issued; and(2)
does not permit the person or persons to whom authority was delegated to issue shares to that person or those persons.(e)
A provision of an authorization provided under Subsection (a) or (d) may depend on a fact ascertainable outside of the authorization, if the manner in which the fact operates on the authorization is clearly and expressly included in the authorization. In this subsection, “fact” includes the occurrence of any event, including a determination or action by any person or persons.(f)
If the authorization of the board of directors delegates to a person or persons the authority to enter into a transaction to issue shares under Subsection (d), the provisions of the authorization under Subsection (d)(1) may not depend on a determination or action by the person or persons to whom authority was delegated.(g)
In this section and notwithstanding Section 1.002 (Definitions), “person” includes a committee of the board of directors.
Source:
Section 21.157 — Issuance of Shares, https://statutes.capitol.texas.gov/Docs/BO/htm/BO.21.htm#21.157 (accessed Jun. 5, 2024).
