Assessable stock refers to a type of stock that can be resold by the issuing company if the stockholder does not pay any required assessments. This means that the company has the right to impose additional financial obligations on its shareholders. Historically, assessable stocks were the most common form of equity issued by companies before the twentieth century.
Assessable stock is primarily used in corporate law and finance. It is relevant in situations where companies need to raise additional capital from shareholders. Legal practitioners may encounter this term when dealing with corporate governance, shareholder agreements, or when advising clients on investment strategies. Users can manage some aspects of assessable stock through legal templates provided by US Legal Forms, which can help in drafting necessary documents.
Here are a couple of examples of abatement:
Example 1: A company issues assessable stock and requires shareholders to pay an annual assessment to fund company operations. If a shareholder fails to pay, the company can sell their shares to recover the unpaid amount.
Example 2: A startup offers assessable stock to investors but includes a clause that allows for the resale of shares if assessments are not met (hypothetical example).
Examples of state differences (not exhaustive):
| State | Variation |
|---|---|
| California | Assessable stock must be explicitly stated in the articles of incorporation. |
| Delaware | Allows companies to issue assessable stock but requires clear communication of assessments to shareholders. |
| New York | Regulations specify the process for assessing stock and the rights of shareholders. |
This is not a complete list. State laws vary and users should consult local rules for specific guidance.
| Term | Definition | Key Differences |
|---|---|---|
| Callable Stock | A type of stock that can be bought back by the issuing company at a predetermined price. | Callable stock is repurchased by the company, while assessable stock may be resold if assessments are unpaid. |
| Preferred Stock | A class of stock that typically has a fixed dividend and priority over common stock in asset distribution. | Preferred stock generally does not involve assessments, whereas assessable stock does. |
If you hold assessable stock and receive an assessment notice, it's important to pay the required amount on time to avoid losing your shares. If you're unsure about the implications, consider consulting a legal professional. For those looking to manage their stock assessments or related documents, US Legal Forms offers various templates that can simplify the process.
Browse our library of 85,000+ state-specific legal templates.
If you fail to pay the assessment, the company may resell your shares to recover the unpaid amount.