If a stock subscription is less than half of the total subscription price, which consequence follows?

• A. The stock is canceled and the consideration is retained by the corporation
• B. The stock is issued and the subscriber remains liable for the rest
• C. The board may issue the stock to a different subscriber
• D. The corporation may seek a court order to proceed anyway

Answer: (A)

The main idea is that a stock subscription is a contract that must be supported by paid consideration. In New York corporate practice, if a subscriber pays less than half of the total subscription price, the corporation may treat the subscription as abandoned. The remedy is to cancel the subscription and keep the money that has already been paid as the corporation’s compensation for the incomplete deal, allowing the corporation to reissue the stock to someone else. This protects the company’s paid‑in capital and prevents issuing shares for insufficient consideration. If more than half had been paid, the corporation would have a stronger basis to pursue payment or enforce the subscription, but with less than half, cancellation is the appropriate consequence.