After you have formed your corporation, one of the first tasks is issuing stock to the shareholders of the company. There are six basic steps to issuing stock correctly.
Step 1 – Write down or type out each of the shareholders names, addresses, and percentage of the company they will own.
Step 2 – Determine how many shares the corporation has available to issue. The number of shares authorized to issue are indicated on the first page of your Articles of Incorporation. If you are unable to find them there, you can go to your corporation’s listing at your Secretary of State’s website and see how many shares are authorized. If you are still unable to find the number of shares, call the Secretary of State directly.
Step 3 – Calculate the number of shares you will issue to each individual shareholder based on the percentage ownership and number of shares. Don’t issue all shares available. If you have 25,000 shares available for issue, you may want to only issue 1,000 or 100 shares to start. This will give you more shares to issue at a later time if you have additional investors or stake holders come into the company.
Step 4 – Physically write out the stock certificates with the shareholders name, number of shares they own and the certificate number. Stock certificates can be purchased from office supply stores, directly online or you can purchase a corporate record book that will typically come with your first 10 or 20 certificates.
Step 5 – Record in your stock ledger each certificate that has been issued. In the stock ledger you will record the name of the shareholder, the number of shares issued, the stock certificate number, how much they paid for the shares, the type of shares they were (common, preferred, voting, non-voting, etc.), the date of the transaction, and who sold the shares to the new shareholder. If the company issued the shares it would be considered an initial offering of the company.
Step 6 – Send the stock certificates to each shareholder.
These steps provide a guide for issuing shares of a new corporation. Additional tasks that should be completed upon forming a new corporation are initial meeting of shareholders and directors, writing resolutions and opening a bank account.