Issuing stocks after forming a CA corporation

[bluepiaa]

Name of State: California

Hi, I've just successfully formed a California Corporation. I've filed my article of incorporation without naming any corporation directors. I will be filing my statement of information soon and my main question is how do I issue shares for both my partner and I? There will only be two of us in the ownership, each owning 50% of the company. We are using the company to purchase a franchise.

I am reading a book from Nolo, "How to form your own california corporation". It states that we have to get "consideration" when issuing a stock. What exactly is this "consideration"? How much is considered "consideration"? Would for example, issuing 10,000 shares for $0.01 a piece be enough? Or would simply being a director of this corporation entitle my partner and I to stocks? How much money (in stocks) should be issued if the cost of the franchise is to exceed $250,000?

I know the common reply to a lot of the questions on this forum is to contact a lawyer. The reason why I am doing this on my own is to skip the lawyer. The lawyer fees are just outrageous.

Thanks.What is the name of your state?

 

[clueless3]

It's YOUR corporation, so you can issue how many shares as you want, for how much you want (even 1c per share is fine). In general, you want to keep it under 75,000 shares because if you issue more than that then the state will charge you more money.

Let's say you want to issue 75,000 shares. And you want the corp to have $375,000 (more than the $250k needed for the franchise, but it can be anything you want the corp to have in its bank). That would make $5 a share. There are 2 stockholders (you and your partner, "John Blue" and "Dave Piaa"). So, you do:

* write in your Resolution book that "On 02/10/2007, we resolved to issue 75,000 shares at $5 a share. [signed by an officer]"
* go to an office supply store and buy a couple of sample stock certificates
* print the number of shares that you want to issue to each stockholder (37,500) and the par value ($5) on it
* print each stockholder's name on the certificate
* date and sign the certificate
* "stamp" it with your corporate embosser
* make sure it has some kind of serial number
* give each certificate to the stockholders
* make them each write a check for $187,500
* deposit the 2x $187,500 into the corporate bank account
* write in the Ledger the stock certificates' details

Now you have issued 75,000 shares of stock, raised $375,000 in cash for the corporation. Each stockholder now has 37,500 shares worth $187,500. Keep the certificates in a safe place as they prove your ownership of the corporation.

And yes, it's ridiculous if the answer is "Consult a lawyer" because that would defeat the purpose of the Forum. The reader should know better what to do: he is responsible for his own action. In fact, when he signed up with the Forum, he already agreed to the Terms and Conditions.