Identify the consideration promised for the shares
A founder may approve shares and enter them on the cap table while postponing the payment required by the subscription. The company should distinguish issued shares, the agreed consideration and what was actually delivered. A ledger percentage does not establish that the stock is fully paid. Begin with the approval, subscription agreement, payment terms and evidence of money or property transferred.
Delaware General Corporation Law section 162 addresses liability where share consideration remains unpaid and corporate assets are insufficient for creditor claims. Sections 162 and 163 also contain procedural and payment provisions. The founder should not assume corporate limited liability eliminates an unpaid subscription obligation. This review concerns the price promised for the shares, rather than a general obligation to cover every corporate debt.
Calculate the unpaid balance separately from debt
Suppose an investor subscribes for shares for $100,000 and pays $35,000. The unpaid consideration is $65,000. If the corporation later has a $200,000 creditor shortfall, the investor should not treat the subscription as paid merely because the shares appeared on a capitalization presentation. Conversely, the example does not mean section 162 automatically makes that investor liable for the entire $200,000.
The statute’s limits, conditions and recovery process must be applied to the actual facts. Preserve the original $100,000 commitment, the $35,000 payment and the remaining $65,000 separately. A balance sheet that records only a net equity total may not show the promise clearly enough for a director or later administrator to identify the remaining obligation.
Reconcile approved consideration with delivery evidence
Collect bank records, property transfer documents and any agreed noncash consideration. If services or another form of consideration were authorized, evaluate whether the actual issuance and delivery meet the applicable rules instead of assuming cash was required or that any informal service supplied the price. Preserve the board’s valuation and issuance records and reconcile them with the subscription terms.
Do not create a retroactive receipt when the company discovers missing payment. Record the actual transaction and analyze the appropriate next action. If the parties change payment terms, preserve the amendment and its authority. The stock ledger, accounting records and subscription file should tell a consistent story about what was promised, delivered and still outstanding, rather than relying on a founder’s statement that the shares were always intended as free equity.
Review transfer and payment-demand rules
A transfer of unpaid shares does not necessarily erase the original subscriber’s liability. Section 162 distinguishes a good-faith transferee without knowledge or notice and other specified holders. The company should preserve the transfer chronology and actual knowledge facts rather than assuming every sale shifts the entire unpaid obligation to the buyer. A transfer certificate should not inaccurately describe the shares as fully paid.
Section 163 addresses board demands for payment and notice for stock not paid in full. Use the actual procedure if the corporation calls the unpaid balance. Do not substitute an abrupt informal debit from the shareholder’s distribution account without evaluating authority and notice. Retain the demand, delivery evidence and payments so later creditors or officers can understand how the corporation administered the outstanding subscription.
Maintain a permanent paid-status schedule
Keep a share schedule showing consideration, payments, remaining balance and relevant dates. Reconcile it after each transfer or additional payment. Give directors accurate information before approving distributions, financing or certifications involving paid capital. The company should preserve creditor claims and recovery records if insolvency makes the statutory liability provisions relevant.
This article does not determine validity of an issuance, establish creditor recovery or resolve every transferee defense and limitation period. The consideration, payment, transfer and statutory conditions control. The useful decision is to establish paid status from actual delivery records before treating the stock as fully funded. That prevents a founder from overlooking an enforceable capital promise simply because the cap table already shows ownership, while keeping that promise distinct from an unlimited personal guarantee of company obligations. Ask the company secretary to reconcile paid status before providing a fully-paid-stock certification to a lender or investor. The certificate should follow the actual records rather than an assumed status carried forward from formation. Retain historical versions of the schedule so a later payment does not obscure whether the balance remained unpaid at an earlier relevant date.
Sources & further reading
Consult the original guidance and its effective dates. These references support the educational discussion; their application depends on the specific facts.