Bar Questions
Bar Questions
SUGGESTED ANSWER:
a) A stock corporation may only acquire its own shares of stock if the trust fund doctrine is not impaired.
This is to say, for instance, that it may purchase its own shares of stock by utilizing merely its surplus
profits over and above the subscribed capital of the corporation
b) The arrangement between the corporation and its President to the extent that it calls for the payment of
the latters shares is covered by the trust fund doctrine. The only exceptions from the trust fund doctrine
are the redemption of redeemable shares and, in the case of close corporation, when there should be a
deadlock and the SEC orders the payment of the appraised value of a stockholders share.