MARVIN MANDEL, Governor                               1535

ARE CONVERTIBLE.

REVISOR'S NOTE: Subsection (a) of this section
presently appears as Art. 23, §20(c). It has
been reworded to clarify that the board must
set the price of shares whenever the
corporation issues then.

Subsection (b) of this section synthesizes
provisions presently appearing in Art. 23, §§
20(c) and 22(c). Language relating to the
effect of a valuation "stated in the charter"
is derived from §22(c).

Subsection (c) of this section presently
appears as the first sentence of Art. 23,
§20(g). The last sentence of §20(g), which
excepts stock dividends from shareholder
approval, now appears in §2—204(c). The
present provisions of §20(g) which specify
that the actual value of consideration in a
stock dividend is the amount of capitalized
surplus are deleted as unnecessary.

Subsection (d) of this section presently
appears as Art. 23, §20 (i).

Subsection (e) of this section presently
appears as Art. 23, §20(e).

The only other changes are in style.

2-204. REQUISITES TO ISSUANCE.

(A)   LIMITATION IN CHARTER OR BYLAWS.

A CORPORATION MAY NOT ISSUE STOCK OR CONVERTIBLE
SECURITIES IN VIOLATION OF A LIMITATION OR RESTRICTION
CONTAINED IN ITS CHARTER OR BYLAWS.

(B)   WHEN STOCK OUTSTANDING.

IF STOCK OF THE CORPORATION IS OUTSTANDING AND
ENTITLED TO BE VOTED AT THE TIME THE BOARD OF DIRECTORS
ADOPTS A RESOLUTION AUTHORIZING THE ISSUANCE OF
ADDITIONAL STOCK OR CONVERTIBLE SECURITIES, THE
CORPORATION MAY NOT ISSUE THE STOCK OR THE CONVERTIBLE
SECURITIES UNLESS:

(1) THE CHARTER PERMITS THE BOARD OF
DIRECTORS TO AUTHORIZE THE ISSUANCE;

(2) THE CHARTER DOES NOT REQUIRE STOCKHOLDER
APPROVAL OF THE ISSUANCE, AND THE ACTUAL VALUE OF THE