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Section 2 |
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Shares Of Stock |
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| A corporation may issue
common or preferred stock with or without par value. A preferred shareholder
does not have voting rights, and subsequently does not govern the actions
of management. Dividends are first paid to common shareholders.
Common stock is the ordinary stock of the corporation. Common shareholders are entitled to one vote per share of stock held and their vote controls the management of the company. If there are no preferred shareholders, all declared dividends are paid to those holding common shares. Most new corporations will probably only wish to issue on class of stock (common) if all investors are be on an actual equal basis. Preferred shares may be issued at a later date, if it becomes desirable. A par value may be assigned to common stock. At one time, par value stock was commonly issued. Many people mistakenly believed the par value amount to represent the value of stock. This, of course, was far from the truth. No par value stock was conceived to limit deception and misunderstanding of the true worth of the stock. The market value is the real indicator of net worth of a corporation. The market value fluctuates continuously, depending on the amount of assets, liabilities, good will, and generally how well the company is prospering. These factors and more must be taken into consideration in determining the true value of each share of stock. The par value printed on the stock certificate has little significance. A shareholder who wishes to retain control of a corporation can do so without having to issue all of the authorized shares. The unissued shares may then be used in the future without having to pay additional fees to increase the authorized capital stock. If a greater number of shares is necessary , the increase can be accomplished quickly at any time. Prior to issuing or selling stock in your company, obtain a copy of the state and federal securities laws. Write to the Securities Division of the Secretary of State Office and the Securities and Exchange Commission, Washington D.C., 20549 for additional information. If only a few persons are to own stock (i.e., 15 or less) in the corporation, complying is usually a matter of completing a simple form and paying a registration fee. In some states, there are no requirements prior to issuing stock. However, you should know the requirements which will effect the issuance of stock in your corporation before you proceed. Legal counsel is recommended.
Published by: CRA
of America, Inc.™ Telephone
(702) 243-9150 e-mail: info@craofamerica.com |
