Stock Issuance Resolution – By David Gass

Holding corporate meetings and keeping up with resolutions is fundamental to why you formed a corporation. Appropriate and timely corporate resolutions help protect the personal assets of owners and officers.

The Board of Directors holds meetings to take certain actions to complete the organization of the corporation. These actions are taken in the form of resolutions at the meeting of the Board of Directors. One of these actions that engage the board of directors is a resolution for issuing the corporations stock.

A business corporation must sell shares of stock in order to capitalize the corporation, that is, provide the corporation with its own capital, apart from the money of its owners. This separation provides part of the support for shielding the shareholders from personal accountability for the debts and obligations of the corporation.

Shares of stock sold by the corporation represent balanced ownership interests held by shareholders in the corporation. "Par value" is a cash value assigned to shares of stock which is the lowest sum for which each share may be sold. There is no minimum or maximum value that must be assigned. Shares may also have "no par value," which means that the Board of Directors will assign a value to the stock below which the shares cannot be issued.

There are several different types of shares, including common stock, preferred stock, treasury stock, and dual class shares. Preferred stock, often called preference shares, have priority over common stock in the distribution of dividends and assets, and often have enhanced voting rights such as the ability to veto mergers or acquisitions or the right of first refusal when new shares are issued (i.e. the holder of the preferred stock can purchase as much stock as they want before the stock is offered to others). A multiple class equity structure has several classes of shares (for example Class A, Class B, and Class C) each with its own advantages and disadvantages. Treasury stock are shares that have been bought back from the public. Treasury Stock is considered issued but not outstanding.

There are no minimum numbers of shares that must be approved in the articles of incorporation. One or more shares may be authorized. However, the corporation may not sell more shares than it is authorized to issue and it must receive consideration in exchange for its shares.

Corporate Resolutions, Bylaws, Company Minutes and Stock Ledger information maintained properly are vital to the continued success and existence of a corporation. They are the unfailing protection of the company directors and shareholders.

As a general rule all records, resolutions and recorded minutes of your corporation should be kept for a period of no less than six years. Our software Corporate Manager is a complete all-in-one set of tools to help you keep your corporate records up to date, all in one place, and in complete compliance. Please visit our website for a free test drive!