1550                                             LAWS OF MARYLAND                       [Ch. 311

HAS A PREFERENCE IN THE ASSETS OF THE CORPORATION IN THE
EVENT OF INVOLUNTARY LIQUIDATION, THE BOARD MAY ALLOCATE
TO CAPITAL SURPLUS ONLY A PORTION WHICH DOES MOT EXCEED
THE AMOUNT BY WHICH THE CONSIDERATION EXCEEDS THE
AGGREGATE AMOUNT OF THE PREFERENCE.

(C) EXCEPTION - ACQUISITION OF ANOTHER CORPORATION,

SUBSECTIONS (A)(2) AND (B) OF THIS SECTION DO NOT
AFFECT A GOOD FAITH ALLOCATION OF AMOUNTS TO RETAINED
EARNINGS, EARNED SURPLUS, OR A SIMILAR ACCOUNT IF:

(1)    STOCK IS ISSUED IN A CONSOLIDATION,
MERGER, OR ACQUISITION OF ALL OR SUBSTANTIALLY ALL OF THE
STOCK OR ASSETS OF ANOTHER CORPORATION; AND

(2)    IMMEDIATELY AFTER THE TRANSACTION, THE
AGGREGATE RETAINED EARNINGS, EARNED SURPLUS, OR SIMILAR
ACCOUNT OF THE CORPORATION WHICH ISSUED THE STOCK DOES
NOT EXCEED THE AGGREGATE OF THE CORRESPONDING ACCOUNTS OF
THE CORPORATIONS PARTIES TO THE TRANSACTION AS THEY
EXISTED IMMEDIATELY BEFORE THE TRANSACTION.

REVISOR'S NOTE: Subsections (a), (b), and (c) of
this section presently appear as Art. 23, §24
(a), (b) , and (d) , respectively.

Present Art. 23, §24(c), which relates to the
determination of the consideration received
for stock with par value issued together with
stock with par value, now appears in §2—302.

In subsection (c) of this section, the
definition of "assets" is relied on. See
§1—101 of this article.

The language of present Art. 23, §24 (d)(i),
which relates to the applicability of present
§24(a), is deleted and subsection (c) is
drafted as an exception to subsections (a)(2)
and (b) .

The only other changes are in style.

2-3 04. APPLICATION OF CAPITAL SURPLUS.

(A) PERMITTED USES.

BY RESOLUTION OF ITS BOARD OF DIRECTORS, A
CORPORATION MAY APPLY ANY PART OF ITS CAPITAL SURPLUS
FOR:

(1) THE REDUCTION OR ELIMINATION OF A
CORPORATE DEFICIT ARISING FROM A LOSS, HOWEVER INCURRED,