Assessable Capital Stock
Assessable stock can require holders to contribute additional amounts after acquisition under the share terms, statute, or an unpaid subscription obligation.
Share-issuance terms distinguish premiums and discounts to par from unpaid consideration, later assessments, and historical watered-stock claims.
Share issuance can create several different capital questions: whether consideration was above or below par, whether part remains unpaid, whether holders can face a later assessment, and whether property or services were overstated to make inadequately funded shares appear fully paid.
| Term | Main issue |
|---|---|
| Share Issued at a Discount | Original issue consideration below nominal or par value |
| Share Issued at a Premium | Original issue consideration above nominal or par value |
| Assessable Capital Stock | Holder can be required to contribute more after acquisition |
| Watered Stock | Shares treated as fully paid despite inadequate or overstated consideration under a historical capital rule |
A 20% IPO discount to an expected market price is not necessarily a discount to par. A stock that later trades below par was not necessarily issued at a discount. A richly valued company is not automatically watered stock. And a partly paid share exposes the holder to its unpaid agreed consideration, which differs from a separate assessment beyond the original price.
Use the charter, issue authorization, subscription terms, valuation evidence, payment records, stock ledger, and governing statute. These concepts are heavily jurisdiction- and date-dependent.
This section is educational and does not provide legal, securities, tax, accounting, insolvency, transaction, or investment advice.
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Assessable stock can require holders to contribute additional amounts after acquisition under the share terms, statute, or an unpaid subscription obligation.
A share issued at a discount is originally allotted for consideration below its nominal or par value, where prohibited or specially regulated by company law.
A share issued at a premium is originally issued for consideration above nominal or par value, with the excess allocated to APIC or share premium.
Watered stock historically described shares treated as fully paid despite inadequate or overstated consideration, potentially leaving a capital shortfall.