Nonassessable

The holders of nonassessable stock in a corporation are not required to contribute additional funds to the corporation beyond their initial capital contribution to the corporation for the issuance of the stock in the first place. In other words, once issued, the stockholders of such stock have no further obligations to continue contributing capital to the corporation, even if the corporation asks them to do so. When stockholders in a corporation are issued stock, they are either issued stock certificates or notices of issuance, which contain the same representations as what would otherwise be on stock certificates. Holders of nonassessable stock, when they receive their stock certificates or notices of issuance, will see imprinted on those documents words to the effect of the stock being “fully paid and nonassessable.” Such stock is much more common than assessable stock. Assessable stock requires that stockholders in a corporation will continue to be obligated to contribute additional capital to the corporation upon the corporation’s decision to require such contribution. Different classes of stock in a corporation can have difference preferences. For example, common stockholders will have different preferences than holders of Series A, Series B, and so on, stockholders. Regardless of such preferences, each stockholder typically receives nonassessable stock.