84-8-210. Overissue. (a) In this section, "overissue" means the issue of securities in excess of the amount the issuer has corporate power to issue, but an overissue does not occur if appropriate action has cured the overissue.
(b) Except as otherwise provided in subsections (c) and (d), the provisions of this article which validate a security or compel its issue or reissue do not apply to the extent that validation, issue or reissue would result in overissue.
(c) If an identical security not constituting an overissue is reasonably available for purchase, a person entitled to issue or validation may compel the issuer to purchase the security and deliver it if certificated or register its transfer if uncertificated, against surrender of any security certificate the person holds.
(d) If a security is not reasonably available for purchase, a person entitled to issue or validation may recover from the issuer the price the person or the last purchaser for value paid for it with interest from the date of the person's demand.
History: L. 1996, ch. 202, ยง 53; July 1.
KANSAS COMMENT, 1996
This section is derived from the former 84-8-104, which has been extensively redrafted. The section is identical to the Official Text.
K.S.A. 17-6401 et seq. lays down general rules regarding issuance of securities. Although overissued stock is generally void, subsection (a) recognizes the issuer may be able to cure the overissue easily. If so, there is no longer an overissue. Subsection (b) does not require the corporation to overissue stock. The purchaser of a security which would be an overissue has two remedies in subsections (c) and (d). Under subsection (c) a person may compel the issuer to deliver an identical security, if one is reasonably available. Otherwise, the person entitled to issue may recover damages under (d). The measure of damages is the price paid for the security, not the face amount, plus interest from the date of demand. See Farmers State Bank v. City of Yates Center, 229 K. 330, 624 P.2d 971 (1981). This measure of damages resolves a question which was unsettled under former law. The remedies available under paragraphs (c) and (d) are alternative, not cumulative.
|
|