Washington Law Review


Law review analysis of stock subscription law—the law related to promises to pay to a corporation a stated sum for a specified number of unissued shares—has been noticeably lacking in recent years. I suspect the most prominent reasons for the void center on the feeling in the academic community that subscriptions are used infrequently and that in any event the law related to them is settled. The material that follows demonstrates that both these propositions are false: subscriptions appear to be used with some frequency in the formation of small corporations, and the law related to them remains complex and often difficult to locate. This article attempts to provide some guidance to practitioners who encounter this relatively intractable area of law. Counsel may encounter questions regarding the validity of a stock subscription either in litigation or in planning a proposed transaction. Litigation related to stock subscriptions presents difficult questions as to which of a number of potentially applicable bodies of law ought to be applied. Partly because of such complexity, planners typically seek means of accomplishing transactions without the use of stock subscriptions.

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