Colorado § 7-106-104 - Fractional shares.

§ 7-106-104. Fractional shares.

(1) A corporation may:

(a) Issue fractions of a share or pay in cash the value of fractions of a share;

(b) Arrange for disposition of fractional shares by the shareholders; or

(c) Issue scrip in registered form entitling the holder to receive a full share upon surrendering enough scrip to equal a full share.

(2) Each certificate representing scrip shall be conspicuously labeled "scrip" and shall contain the information required to be included in a share certificate by sections 7-106-206 (2)(a), (2)(c), and (4) and 7-106-208 (2).

(3) The holder of a fractional share is entitled to exercise the rights of a shareholder, including the right to vote, to receive dividends, and to participate in the assets of the corporation upon liquidation. The holder of scrip is not entitled to any of these rights unless the scrip provides for them.

(4) The board of directors may authorize the issuance of scrip subject to any condition considered desirable, including:

(a) That the scrip will become void if not exchanged for full shares before a stated date; and

(b) That the shares for which the scrip is exchangeable may be sold and the proceeds paid to the scripholders.

Source: L. 93: Entire article added, p. 755, § 1, effective July 1, 1994. L. 2003: (4)(a) amended, p. 2316, § 228, effective July 1, 2004. L. 2023: (1)(c) amended, (HB 23-1297), ch. 441, p. 2582, § 1, effective August 7.

ANNOTATION

Law reviews. For note, "Discount, Bonus and Watered Stock in Colorado", see 33 Rocky Mt. L. Rev. 197 (1961).

Annotator's note. Since § 7-106-104 is similar to § 7-4-109 as it existed prior to the 1993 recodification of the "Colorado Business Corporation Act", articles 101 to 117 of title 7, cases construing that provision and its predecessors have been included in the annotations to this section.

Section held constitutional. No impairment of contractual rights, no denial of due process, and no non-consensual taking of private property of minority stockholders exists where corporate reverse stock split and fractional buyout followed enactment of this section which was embodied in corporation's articles of incorporation. Goldman v. Union Bank and Trust, 765 P.2d 638 (Colo. App. 1988).