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When forming your Delaware Corporation, we ask for the company name, initial directors and contact information, as well as the company stock structure. The company stock structure is the total number of authorized shares and par value of the stock. In Delaware, the state requires that certain things are listed on the Certificate of Incorporation that is filed with the Delaware Secretary of State including: the name of the company, the name and address of the Registered Agent and the Corporation’s stock structure (total number of authorized shares and par value of the shares).
Many times, clients will contact us and inform us that additional shareholders will be issued a certain number of authorized shares. While this is important information, the Delaware Secretary of State does not require this information and neither does the Registered Agent. Clients keep track of their Corporation’s issued shares within a Stock Transfer Ledger and sometimes, stock certificates are issued.
The Stock Transfer Ledger is a very important item to update and maintain internally within your Corporation. The ledger documents shares issued or transferred to your company’s shareholders. This is an internal ledger. Neither the State of Delaware, nor your registered agent requires this information or keeps the ledger on file. The Stock Transfer Ledger is for your company’s internal records only.
In the Stock Transfer Ledger, the names of the shareholders can be listed along with important information such as their places of residence, the time that they gained ownership within the corporation, the number of shares issued, the amount paid for the shares, and the stock certificate number that was distributed (if stock certificates were issued to the shareholder internally). You can also keep track of transferred shares, to whom the shares were transferred, on which date, as well as the value of the stock transfer.
Delaware also allows for Corporations to keep their corporate records internally using digital ledger technology or blockchain technology. In other words, corporate transactions can be recorded digitally worldwide. As blockchain becomes more prevalent, you will see more companies move to blockchain technology to maintain their corporate records.
It’s critically important to maintain an accurate stock transfer ledger so that there are no errors in ownership and so that the company does not violate corporate law.
Our most popular formation package is the Standard Delaware Formation Package that includes a physical corporate kit that ships to your address. The kit contains the Stock Transfer Ledger and other items such as: a physical seal embosser, a Delaware Company Guidebook, a Meeting Minute Book, customizable bylaws, organizational resolutions and ten numbered stock certificates that feature the company name. If you formed your Delaware company and did not order a Corporate Kit, but change your mind, let us know. We are happy to help you.
As your company brings on more investors, you may need more authorized shares. If this is the case, again we are happy to help. We can prepare and file a Stock Amendment with the Delaware Secretary of State for approval. It takes about 3 to 5 business days for the Delaware Secretary of State to approve the Amendment with our service. Our filings team will prepare the Stock Amendment and email the document for review and your electronic signature. Once signed, we will file the Amendment with the state for approval.
If you have any questions, I can be reached at 1-302-645-7400 ext. 6144 or via email at Justin@delawareinc.com.
THE AUTHOR OF THIS BLOG ARTICLE IS NOT A LAWYER AND HARVARD BUSINESS SERVICES, INC. IS NOT A LAW FIRM. THE ARTICLE ABOVE IS NOT INTENDED AS LEGAL ADVICE AND SHOULD NOT BE TAKEN AS LEGAL ADVICE. THIS SHORT ARTICLE IS STRICTLY TO MENTION SOME ASPECTS OF DELAWARE'S CORPORATION LAWS AND/OR LAWS RELATING TO OTHER FORMS OF ENTITIES WHICH YOU MAY NOT BE FAMILIAR WITH. WE RECOMMEND THAT YOU CONSULT WITH A LAWYER BEFORE FORMULATING A STRATEGY WHICH WILL BE SUITABLE FOR YOUR SPECIFIC CASE.