Corporate Stock Issuance and Share-Certificate Requirements in North Dakota

At a glance

Requirements one by one

Governing law, entity, original issuance, and scope

N.D.C.C. § 10-19.1-00.1 names the North Dakota Business Corporation Act. This cell follows a direct original issuance under Chapter 10-19.1, not a subscription, purchase right, share dividend, reacquisition, secondary transfer, merger, or exchange.

Authorized and available shares, classes, series, and preemptive-right boundary

N.D.C.C. § 10-19.1-61 requires board authorization for securities and purchase rights. Unless the articles vary them, shares begin as one common voting class and series with equal rights and one-cent par. If the articles authorize the board to create another class or series, its resolution fixes the terms and an officer files the statement before those shares issue.

N.D.C.C. § 10-19.1-93 generally returns acquired unpledged shares to authorized- unissued status unless the articles prohibit reissue. N.D.C.C. § 10-19.1-65 gives shareholders default pre-emptive rights unless the articles or authorized board class/series terms limit them, so actual availability requires the full capitalization and governing record.

Board, shareholder, committee, and delegated issuance authority

Section 10-19.1-61 requires board authorization. N.D.C.C. § 10-19.1-63 allows the board or shareholders to determine consideration, and a qualifying N.D.C.C. § 10-19.1-83 shareholder control agreement may govern corporate power if every current voting and nonvoting shareholder and subscriber signs at first effectiveness.

The direct-issuance section states no delegation to an officer or committee. N.D.C.C. § 10-19.1-64(3) separately allows a board-authorized officer to fix purchase-right terms, but that adjacent authority does not replace the board's direct-issuance authorization.

Cash, property, notes, services, contracts, securities, and other consideration

Section 10-19.1-63(1) permits money, tangible or intangible property, and labor or services actually performed for the corporation. It expressly says that promissory notes and future services are not payment. Future-service contracts and securities are not separately named as consideration.

Adequacy, payment, escrow, partly paid shares, and fully-paid effect

Under § 10-19.1-63(3), a board or shareholder determination about amount, fair value, fairness, payment terms, and the issuance agreement is presumed proper when made in good faith using reasonable accounting, fair valuation, or another reasonable method. Unless the articles require otherwise, consideration may be below par.

Receipt makes the shares fully paid and nonassessable. The Act defines nonassessable shares as shares whose agreed consideration has been fully paid, delivered, or rendered. Assessable shares require unanimous shareholder consent, and the section states no direct-issuance escrow route. N.D.C.C. § 10-19.1-69 preserves the holder's or subscriber's duty to pay the full consideration but protects a good-faith transferee without notice of nonpayment.

Shareholder approval, large issuances, class votes, and outliers

The complete §§ 10-19.1-61 to -70 state no general percentage-based shareholder vote for a large noncash issuance. Section 10-19.1-63(4) instead requires unanimous shareholder consent when shares will be assessable. Section 10-19.1-63(2) separately requires an articles provision or a majority of the issued class or series for the specified cross-class share dividend. N.D.C.C. § 10-19.1-61.1 confirms that the share-dividend branch is adjacent rather than an ordinary direct issuance.

Certificate choice, contents, signatures, seal, and token form

N.D.C.C. § 10-19.1-66 permits certificated or uncertificated shares. A compliant certificated holder receives a certificate stating the North Dakota issuer, owner, share number, class, series, and par or no-par status. The president or a vice president signs with the secretary or an assistant secretary; facsimile and former-officer signatures remain effective. The certificate is prima facie ownership evidence, and the section states no seal requirement or certificate- token form.

N.D.C.C. § 10-19.1-01 recognizes facsimile, network, and electronic signatures and records. N.D.C.C. § 10-19.1-01.1 gives electronic records and signatures legal effect. Those general rules do not turn a data-address ownership entry into a paper certificate.

Uncertificated authorization, notice, electronic record, and ledger

Unless the articles or bylaws prohibit it, § 10-19.1-66(6) allows the corporation to make some or all classes and series uncertificated. Existing certificates remain effective until surrender. Within a reasonable time after issuance or transfer, an ordinary private corporation gives the new shareholder the certificate information; the subsection's no-notice electronic-system exception is limited to publicly held corporations.

N.D.C.C. § 10-19.1-84 requires a share register no more than one year old, ordered alphabetically or numerically by class, with identity, share count and class, and either a mailing address for a named holder or authorized electronic receipt means for a data-address holder. The corporation also records issue dates. Section 10-19.1-01 recognizes as shareholder the registered owner or the owner of the private key uniquely associated with a data address that records share transfers.

Class, series, and transfer-restriction legends, notice, and effect

Section 10-19.1-66 requires class and series terms on the certificate or offers a free statement and carries the information to uncertificated holders. Under N.D.C.C. § 10-19.1-70, a written transfer restriction must appear conspicuously on the certificate or in the uncertificated information to bind a person without knowledge. Earlier-issued securities require the holder to join or vote for the restriction.

A qualifying § 10-19.1-83 control agreement requires certificate or uncertificated notice of its existence and copy location. A shareholder, beneficial owner, or secured party may demand a corporation-paid copy.

Subscriptions, options, ratification, securities, tax, and boundaries

N.D.C.C. § 10-19.1-62 separately requires signed written subscriptions and allows installment payment. Section 10-19.1-64 governs rights, options, and warrants, while § 10-19.1-65 governs default pre-emptive rights. Those adjacent routes and any defective-issuance corrective proceeding do not replace the board's direct-issuance authorization.

Corporate authorization does not establish securities registration, exemption, or antifraud compliance; beneficial ownership; tax or accounting treatment; fiduciary compliance; valuation or dilution; or rights under a financing, investor, or other contract.

What trips people up

North Dakota's one-cent default par value is not a minimum consideration floor. Section 10-19.1-63(3) allows consideration below par unless the articles require otherwise.

The statute expressly rejects two common consideration forms. Promissory notes and future services do not count as payment, even though property and completed services do.

The data-address rule concerns the ownership record, not a certificate token. A certificate is only prima facie evidence; the shareholder definition reaches the owner of the private key associated with a share-recording data address.

Common questions

May North Dakota shares be issued for future services or a promissory note?

No. Section 10-19.1-63(1) expressly says neither constitutes payment; labor or services must already have been performed.

May North Dakota issue assessable shares?

Yes, but § 10-19.1-63(4) requires unanimous shareholder consent. Otherwise the corporation may issue only nonassessable shares.

Can an ownership record use a data address?

Yes. Sections 10-19.1-01 and 10-19.1-84 recognize a data-address identity and the private-key owner, while still requiring the share register's identity, contact, holdings, and issuance-date information.

Statutes and sources

• N.D.C.C. §§ 10-19.1-00.1 to -01.1 — Act name, electronic records and signatures, shareholder record, and private-key/data-address ownership.
• N.D.C.C. §§ 10-19.1-61 to -70 — authorization, consideration, payment, assessable shares, certificates, uncertificated information, restrictions, and adjacent subscriptions and purchase rights.
• N.D.C.C. §§ 10-19.1-83 to -84 — control-agreement notice and the share register.
• N.D.C.C. § 10-19.1-93 — acquired-share status.

Official current text: North Dakota Legislative Branch, North Dakota Century Code Chapter 10-19.1, https://ndlegis.gov/cencode/t10c19-1.pdf, accessed September 4, 2026.