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Has anyone ever had an additional stock issuance and if so what was the procedure and cost associated with this process.
For example: articles of incorporation state 100,000 shares initially issued and our company wants to increase that to 10,000,000 total shares.
You don`t say in which state you incorporated - but most (if not all) are similiar in that your Articles should have stated how many shares the corporation is aurthorized to issue. If that number was 100,000 then you will need to file an amendment with the state increasing the number of authorized shares to 10 million. In most states there is a form for this. Generally you will need "approval" of the board of directors. Usually there is a filing fee.
NOTE: A few states have a tax/fee based upon the number of shares authorized.
Robert Johnson
We are in Michigan, I called the state of Michigan and they told me their fees but I am not sure if you would have additional from other agencys, attornys Etc..
Thanks for the response
Mike Paige
Mike:
It`s always a good idea to have someone look over what you`re planning to do before you file with the state. Shouldn`t be more than a couple hundred dollars.
I can give you the name of an excellent securities attorney - if you contact me off line. Robert@bizgrowthmasters.comm
Robert Johnson
Ken
The corporation`s articles of incorporation state that the corporation is authroized to issue X shares and then may say something like, with a par value of Y or with no right to vote on any issues brought before the shareholders for approval, etc. You simply say that that section is replaced in its entirety by a new section that says the corporation is authorized to issue Z share of a par value of A. Amended articles probably need to be recommended by the directors and approved by the shareholders. This is an issue of state law and I think you would be wise to hire an attorney to do this because if you incorrectly "create" new shares and then sell them to a new stockholder, you may also be creating a securities law issue for yourself. Also the manner of selling the new shares needs to be reviewed by an attorney experienced in securities law to be sure that you are not violating state or federal law.
Yes, the securities laws protect the next shareholder, not you. The federal Securities laws have exemptions, the one that likely applies here is that no registration is necessary if the offering is less than $1,000,000. States also have securities laws and they vary. An exemption at state level depends on the kind of investor involved. If your investor was your wife or father, for example, then the transaction is exempt from registration. And regardless of whether the transaction is exempt, you may be well advised to still provide some disclosure to the investor because the fraud rules still apply.
Max
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