New York Consolidated Laws

N.Y. Business Corporation Law § 504 (2026)

Consideration and payment for shares

✓ current as of May 2026

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§ 504. Consideration and payment for shares.
  (a) Consideration for the issue of shares shall consist of 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 or the subscription price 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 or shareholders, as the case may be, as to the
value of the consideration received for shares shall be conclusive.
  (c) Shares with par value may be issued for such consideration, not
less than the par value thereof, as is fixed from time to time by the
board.
  (d) Shares without par value may be issued for such consideration as
is fixed from time to time by the board unless the certificate of
incorporation reserves to the shareholders the right to fix the
consideration.  If such right is reserved as to any shares, a vote of
the shareholders shall either fix the consideration to be received for
the shares or authorize the board to fix such consideration.
  (e) Treasury shares may be disposed of by a corporation on such terms
and conditions as are fixed from time to time by the board.
  (f) Upon distribution of authorized but unissued shares to
shareholders, that part of the surplus of a corporation which is
concurrently transferred to stated capital shall be the consideration
for the issue of such shares.
  (g) In the event of a conversion of bonds or shares into shares, or in
the event of an exchange of bonds or shares for shares, with or without
par value, the consideration for the shares so issued in exchange or
conversion shall be the sum of (1) either the principal sum of, and
accrued interest on, the bonds so exchanged or converted, or the stated
capital then represented by the shares so exchanged or converted, plus
(2) any additional consideration paid to the corporation for the new
shares, plus (3) any stated capital not theretofore allocated to any
designated class or series which is thereupon allocated to the new
shares, plus (4) any surplus thereupon transferred to stated capital and
allocated to the new shares.
  (h) Certificates for shares may not be issued until the amount of the
consideration therefor determined to be stated capital pursuant to
section 506 (Determination of stated capital) has been paid in the form
of cash, services rendered, personal or real property or a combination
thereof and consideration for the balance (if any) complying with
paragraph (a) of this section has been provided, except as provided in
paragraphs (e) and (f) of section 505 (Rights and options to purchase
shares; issue of rights and options to directors, officers and
employees).
  (i) When the consideration for shares has been provided in compliance
with paragraph (h) of this section, the subscriber shall be entitled to
all the rights and privileges of a holder of such shares and to a
certificate representing his shares, and such shares shall be fully paid
and nonassessable.
  (j) Notwithstanding that such shares may be fully paid and
nonassessable, the corporation may place in escrow shares issued for a
binding obligation to pay cash or other property or to perform future
services, or make other arrangements to restrict the transfer of the
shares, and may credit distributions in respect of the shares against
the obligation, until the obligation is performed. If the obligation is
not performed in whole or in part, the corporation may pursue such
remedies as are provided in the instrument evidencing the obligation or
a related agreement or under law.

Notes of Decisions

Cited in 17 cases, 1985–2019 · leading case: Goldston v. Bandwidth Tech. Corp., 52 A.D.3d 360 (N.Y. App. Div. 2008).

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Goldston v. Bandwidth Tech. Corp., 52 A.D.3d 360 (N.Y. App. Div. 2008). · cites it 5× “The court concluded that the retainer agreement was void because Star did not have the authority to enter into a binding agreement on behalf of the corporations, adopting defendants’ reasoning that the transfer of BTC stock to G & S as compensation for its services required…”

Block v. Magee, 146 A.D.2d 730 (N.Y. App. Div. 1989). · cites it 3× “On the defendants’ argument that the plaintiff was not a shareholder because he had not paid his full subscription, we find that their reliance on Business Corporation Law § 504 (b) and (h) is misconceived.”

Kun v. Fulop, 71 A.D.3d 832 (N.Y. App. Div. 2010). · cites it 2× “” To support her claim that she is a 50% shareholder of Bucked Tooth, Kun argues that, pursuant to Business Corporation Law § 504, her payment of half the legal fees for setting up Bucked Tooth, and half the rent and office expenses thereafter, constituted good and valuable…”

Heisler v. Gingras, 687 N.E.2d 1342 (NY 1997). · cites it 2× “” Business Corporation Law § 504 (a) prescribes that "[consideration for the issue of shares shall consist of money or other property, tangible or intangible, or labor or services actually received by or performed for the corporation or for its benefit.”

KNET, Inc. v. Ruocco, 2016 NY Slip Op 8853 (N.Y. App. Div. 2016). “In the absence of fraud in the transaction, the judgment of the board or shareholders, as the case may be, as to the value of the consideration received for shares shall be conclusive” (Business Corporation Law § 504 [a]). Here, issues of fact exist as to whether Ruocco and…”

In re Rappaport, 110 A.D.2d 639 (N.Y. App. Div. 1985). “It was obviously an attempt to deprive petitioner of his one-half ownership of Jileen.”

Kastle v. Steibel, 120 A.D.2d 868 (N.Y. App. Div. 1986). “Defendants claim that the Statute of Frauds (UCC 8-319) and Business Corporation Law § 504 (b) and § 720 preclude plaintiff’s claims as a matter of law.”

In re M. Kraus, Inc. Drake Zarnin, 229 A.D.2d 347 (N.Y. App. Div. 1996). “) It is clear from the record that the escrow provisions in the 1983 sale agreement were merely a security arrangement and that the agreement and the Irrevocable Stock Power executed simultaneously unambiguously provided for the present, immediate sale of the stock to…”

Vohra v. Prasad Realty Corp., 174 A.D.2d 735 (N.Y. App. Div. 1991). · cites it 2× “Business Corporation Law § 504 prohibits an initial issuance of stock in a new corporation until the full purchase price is paid to the corporation.”

Fresher v. ORMEC Sys. Corp., 1 Misc. 3d 546 (N.Y. Sup. Ct. 2003). “The consideration Krasnicki paid for this stock was set by the board of directors pursuant to Business Corporation Law § 504 (a). Krasnicki’s purchase of the subject shares conformed with the requirements of Business Corporation Law § 505 (d), and *550 that transaction was…”

Torres v. Speiser, 268 A.D.2d 253 (N.Y. App. Div. 2000). “There is no merit to plaintiffs argument that the sale of his stock is invalid under Business Corporation Law § 504 because the price of the stock was less than its par value and such defect could not be cured by the individual defendant’s promises of future consideration.”

Heisler v. Gingras, 169 Misc. 2d 403 (N.Y. Sup. Ct. 1996). · cites it 3× “As stated in Block v Magee ( 146 AD2d 730, 733 ): "On the defendants’ argument that the plaintiff was not a shareholder because he had not paid his full subscription, we find that their reliance on Business Corporation Law § 504 (b) and (h) is misconceived.”

Show all 17 citing cases →

— N.Y. Business Corporation Law § 504(e) — 1 case

Shapiro v. Rockville Country Club, 2004 NY Slip Op 50079(U) (N.Y. Sup. Ct., Nassau Cty. 2004).

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