Overissue refers to the issuance of securities that exceeds the amount an issuer is legally authorized to issue. When an issuer overissues securities, they may be held responsible for compensating the affected parties for any losses incurred. This situation can arise in various financial contexts, particularly in corporate finance and securities law.
Overissue is primarily relevant in the fields of corporate law and securities regulation. It is important in situations involving stock issuance, bond offerings, and other financial instruments. Legal professionals may encounter overissue in cases involving disputes over the validity of securities or when addressing claims from investors. Users can manage some related procedures using legal templates from US Legal Forms, which are crafted by experienced attorneys.
Here are a couple of examples of abatement:
(Hypothetical example) A corporation is authorized to issue one million shares of stock but mistakenly issues one million five hundred thousand shares. This overissue could lead to legal disputes with shareholders who may claim their rights have been violated.
One notable statute addressing overissue is the Uniform Commercial Code (UCC) § 8-210, which defines overissue and outlines the conditions under which it occurs. According to this statute, an overissue does not happen if the issuer takes appropriate action to rectify the situation.
If you find yourself involved in a situation of overissue, consider the following steps:
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The company may be liable to compensate affected parties and may need to take corrective actions to address the overissue.