Issuing Stock 2018-03-16T20:27:50+00:00

Issuing Stock

One major way for corporations to raise money is to issue stock. This is done when a shareholder gives money to the corporation in exchange for an ownership stake in the company. Each share of stock issued represents the amount of money invested and comes with many benefits, such as voting rights and receipt of dividends.

As a result, it’s very important to consider how to issue stock when organizing a corporation and what it means for your business.

Expansion

First and foremost, issuing stock helps businesses raise money. But more importantly, it helps corporations expand and become more profitable. One of the more lucrative decisions for a business to make is to “go public,” or offer shares of stock, known as IPOs (Initial Public Offerings), to the general public, at which point, the corporation is allowed to issue more stock than when they were a private entity. But doing so also carries with it new responsibilities, including federal and state regulations for publicly traded companies and the requirement to release certain information, such as annual earnings, to the public.

Primary and Secondary Markets

Also known as the new-issue market, primary markets are where corporations issue stock to raise money. Secondary markets are when IPO investors trade stocks quietly and effectively as part of the New York Stock Exchange or NASDAQ, among others. The company who originally sold the stock being traded in the secondary markets do not receive any further compensation.

At King Law Firm Attorneys at Law, Inc., we can help you:

  • Determine how much stock the corporation is authorized to issue.
  • Determine an appropriate value for the shares issued.
  • Determine the class of shares to be issued.
  • Determine how many shares the corporation will initially issue.
  • Make sure the company is in compliance with state and federal securities laws.
  • Draft the stock subscription agreement.

If your company is ready to “go public,” or you have questions about whether issuing stock is right for your company, contact us. We’re more than ready to help.

We offer plenty of information and resources to help you manage your business successfully, including:

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