Lesson 8 of 13
Issuing stock and capitalisation
Founders are shareholders only once shares are actually issued and recorded.
How issuance works
- The board authorises the issuance and the price
- Each founder pays the agreed consideration, which may be cash, property or services already provided
- Stock certificates or electronic records are issued
- The company records the holder, number of shares and date in a stock ledger
Vesting and buy-back rights
Founder shares are often subject to vesting so a co-founder who leaves early does not keep the full stake. This is set out in a stock purchase agreement, not in the articles.
Securities law
Issuing shares is a securities transaction. Even founder issuances rely on exemptions from registration, and some states require a notice filing. Take advice before issuing shares to anyone beyond the founding team.
Tax elections on restricted stock, such as an 83(b) election, are time limited. Discuss them with a tax professional at issuance, not later.
Want us to incorporate for you?
You can incorporate directly with the state using the steps in this course. If you would prefer, Gullia Filing prepares and files the Articles of Incorporation, supplies bylaws and organisational resolutions, obtains your EIN and acts as your registered agent.