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Need help Issuing Stock?
Many who form their first Corporation ask us: How can I issue stock? Use this checklist to guide you through the stock issuance process.
Checklist for Issuing Stock:
Determine Your Registration Exemption:
Selling stock in your company is also known as selling securities—an activity that is regulated by both State and Federal laws. Consult an attorney or check the internet for the exemptions available to small businesses. Search “The Jobs Act of 2012” and “SEC Regulation D.” For small business, complying with exemptions is actually easy to do.
Approve the Issuance of Stock:
Call a Board Meeting. Send all directors notice of the time and date 15 days in advance. If you’re the only Director, just have a seat, any time you’re ready to go.
Technically, stock is OFFICIALLY ISSUED when the Board of Directors votes to approve the Board Resolution that states: RESOLVED: The company shall issue XXX Shares of its stock to (NAME) for the price of XX per share or services valued at $XX. The former is a basic resolution, and you can elaborate if you write up the minutes of the meeting and keep them safe. The best way is to check out StockTreasury for Blockchain stock ledger protection.
Record the Stock Transaction:
To transfer shares to the purchaser, you have two choices:
Once you have done the above, the stock officially changes hands. Typically, you do not have to report your stock transactions to any state or federal agency at the time that they happen.
That’s it! You’ve just issued stock.
Restricting Subsequent Transfers:
The company has the right to sell the stock with restrictions. However, if you want to restrict the shares you must notify the buyer of them and get their approval before issuing shares. If you are using paper stock certificates, it’s a good idea to print the restrictions right on the certificate.
Facilitating Subsequent Transfers:
Blockchain technology is enabling direct stock purchases that will soon become an alternative way to invest in small companies and/or raise investment for your small company direct from investors. StockTreasury is blockchain secured and approved for Uncertificated Share Transfers so that you’ll be well positioned for the future growth of your company.
*Disclaimer*: Harvard Business Services, Inc. is neither a law firm nor an accounting firm and, even in cases where the author is an attorney, or a tax professional, nothing in this article constitutes legal or tax advice. This article provides general commentary on, and analysis of, the subject addressed. We strongly advise that you consult an attorney or tax professional to receive legal or tax guidance tailored to your specific circumstances. Any action taken or not taken based on this article is at your own risk. If an article cites or provides a link to third-party sources or websites, Harvard Business Services, Inc. is not responsible for and makes no representations regarding such sources content or accuracy. Opinions expressed in this article do not necessarily reflect those of Harvard Business Services, Inc.