


  § 518. Corporate bonds.
    (a)  No  corporation  shall  issue  bonds  except  for  money or other
  property, tangible or intangible; labor or services actually received by
  or performed for the corporation or for its benefit or in its  formation
  or  reorganization;  a  binding  obligation  to  pay  the purchase price
  thereof in cash or other  property;  a  binding  obligation  to  perform
  services  having  an  agreed  value;  or  a  combination thereof. In the
  absence of fraud in the transaction, the judgment of the board as to the
  value of the consideration received shall be conclusive.
    (b) If a distribution of its own bonds is made  by  a  corporation  to
  holders of any class or series of its outstanding shares, there shall be
  concurrently  transferred  to  the  liabilities  of  the  corporation in
  respect of such bonds an amount of surplus equal to the principal amount
  of, and any accrued interest on, such bonds. The amount of  the  surplus
  so transferred shall be the consideration for the issue of such bonds.
    (c) A  corporation  may,  in  its certificate of incorporation, confer
  upon the holders of any bonds issued or to be issued by the corporation,
  rights to inspect the corporate books and records and  to  vote  in  the
  election  of directors and on any other matters on which shareholders of
  the corporation may vote.

Last modified: August 9, 2006