Treasury stock in relation to stated capital;

              60 HASKINS & SELLS August
Treasury Stock in Relation to Stated Capital
TREASURY stock, if it needs to be
defined, is the stock of a corporation
which has once been issued for value
and subsequently reacquired by the same
corporation. Stated capital is a some­what
more mystical term, meaning differ­ent
things in different states, and to the
average person somewhat obscure. It
is a term which has been introduced in
recent years in connection with corpora­tions
having capital stock without par
value, and, generally speaking, has not
received the important consideration which
it merits. The corporation law of the
State of New York, as to corporations
having shares without par value, makes
alternate provision for stated capital.
Depending on the certificate of incor­poration,
the stated capital must be an
aggregate made up either of the total
preference to which all issued and out­standing
preferred stock is entitled, plus
all outstanding common stock at not less
than $5.00 per share, plus any additional
amounts which the directors shall have
from time to time transferred to the sum
of the two previous amounts; or the
aggregate of the amounts received by
the corporation for stock having no par
value, plus all outstanding shares having
a par value, plus any additional amounts
which the directors may have transferred
to the sum of the two previous amounts.
It thus appears that in the event of failure
on the part of directors to take formal
cognizance of the matter and fix the stated
capital, the provisions of the certificate
of incorporation provide the formula and
the amount becomes automatically deter­mined
by the facts of capital stock trans­actions.
In other words, where, under the first
provision of the law, there is preferred
capital stock having a par value and
common capital stock without par but
with a stated value per share not less than
$5.00, the stated capital becomes the sum
of the preferred capital stock outstanding
at the par value per share, plus the common
capital stock outstanding at the stated
value per share. Under the second pro­vision
the amount of stated capital is
determined by taking the number of
shares of preferred stock outstanding at
the par value per share, plus whatever
was received as consideration for the issu-