Sec. 65 TITLE VII.

STOCKS AND STOCKHOLDERS 605

(1) Liability to the corporation for unpaid subscription (Sees.

60, 67-70.);
(2) Liability to the corporation for interest on unpaid sub-
scription (Sec. 66.);
(3) Liability to creditors of the corporation on unpaid sub-
scription (Sec. 60.);
(4) Liability for watered stock (Sec. 65.);
(5) Liability for dividends unlawfully paid (Sec. 43.); and
(6) Liability for failure to create corporation. (Sec. 10.)
While a stockholder has no personal liability for the debts
of the corporation beyond the amount of his capital investment,
he is personally liable for the above obligations. In addition, he
may become personally liable for damages or otherwise for any
wrongful disposition of corporate assets, breaches of fiduciary
duties, fraud, gross negligence, unauthorized acts, violations of
law, or improper use (e.g., to defraud his creditors to escape per-
sonal debts) of the corporate form.

Sec. 65. Liability of directors for watered stocks. — Any

director or officer of a corporation consenting to the
issuance of stocks for a consideration less than its par
or issued value or for a consideration in any form other
than cash, valued in excess of its fair value, or who,
having knowledge thereof, does not forthwith express his
objection in writing and file the same with the corporate
secretary, shall be solidarily liable with the stockholder
concerned to the corporation and its creditors for the
difference between the fair value received at the time of
issuance of the stock and the par or issued value of the
same. (16, 2nd par.)

Watered stock defined.

Watered stock is stock issued not in exchange for its equivalent
either in cash, property, share, stock dividends, or services, (see
Sec. 62.) It includes stock:
(1) issued without consideration (bonus share); or
(2) issued as fully paid when the corporation has received a
lesser sum of money than its par or issued value (discount share);
or