Authorizing The Sale of Stock Resolution - By David Gass

Whether the initial meeting of the Board of Directors is undertaken by agreed upon written consent or by an actual meeting with waiver of notice, certain organizational actions must be taken by the directors. These actions are taken in the form of resolutions adopted by directors which relate to the formation of your corporation.

Resolutions are the everyday corporate operations adopted by the Board of Directors that involve daily transactions of the corporation. Some of these include leasing, purchases, hiring, banking, borrowing, investing, paying dividends, salaries, providing benefits for employees, and "Authorizing the Sale of Stock".

The Board of Directors of the company will approve the offer and sale of the stock, and any agreements needed for the sale and the filing of any governmental documents. This will be done through a resolution adopted at a Board meeting or by written unanimous consent.

Stock represents an ownership interest in a corporation, which is normally represented by the issuance of a certificate for shares of stock in exchange for capital from the investors. Money or property given to a corporation in trade for an equity interest belongs to the corporation and usually does not have to be repaid on a certain date.

A business corporation must sell shares of stock in order to capitalize the corporation, that is, supply the corporation with its own capital, separate from the money of its owners. This separation provides part of the support for protecting the shareholders from personal legal responsibility for the debts and obligations of the corporation.

Shares of stock sold by the corporation stand for impartial ownership interests held by shareholders in a corporation. "Par value" is a dollar value assigned to shares of stock which is the lowest amount 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 beneath which the shares cannot be issued.

Shares of stock are printed articles that represent the amount of money invested in the corporation by an individual shareholder. The corporation ascertain, at the outset of incorporating, how many shares it shall issue and what classes of shares (i.e. No Par, Par, Common, Preferred, Participating, etc.) it will issue. In a close corporation, the number of shares are determined and sold to only one or a few investors. In other corporations the shares are sold to numerous investors or to the open public. Each share represent ownership in the corporation, and it entitles the holder to certain types of privileges (i.e. voting rights, dividends, etc.).

Finally, the company's charter (Articles) should be reviewed to ensure that you have enough shares authorized to permit the new issuance.

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.

Our software Corporate Manager is a complete all-in-one set of tools and services to help you keep your corporate records up to date and in complete compliance. Please visit our website for a free test drive!