A proxy is a person who is appointed by another to represent and act for him, usually in the voting of his stock. The written document appointing the proxy person is also called a proxy. Proxies are most common in…
A corporation can issue different types of stock to its shareholders. Common stock is the most basic type of stock. The owners of common stock generally possess voting rights and rights to dividends if and when declared by the company’s…
Anytime you sell shares of stock in a corporation or membership interests in an LLC, you are subject to state and federal securities laws. The courts interpret the word security very broadly to mean, in addition to the sale of…
Preemptive rights give an existing shareholder the right to purchase a proportionate share of any new issuance of shares before it is offered to others. If an existing shareholder owned 10% of the issued and outstanding stock in a corporation…
Cheap stock generally refers to the initial or first shares of stock issued in a company. The value of the stock is often relatively cheap because the company is just starting and has not built up or developed significant value.…
Authorized shares of stock refer to the type and number of shares that a corporation can issue or has the right to issue. The articles of incorporation filed with the state must describe the type and number of shares a…
The word par means established value. A par value stock is stock with an arbitrary or nominal value established by the company’s incorporators. In past times, par value represented the selling price of shares. Now, it has little significance and…
A corporation, just like an individual, is entitled to borrow money either from its shareholders or from some outside party. If the corporation borrows money from a person involved with the company or from someone else, then a written resolution…
Stock can usually be issued for services or something of value. The legal word most often used to describe what can be used to pay for stock is the word “consideration.” The state corporation law governs what form of consideration…
Unless stock is publicly traded, there is no market to set the value of stock. The value is really what the corporation is worth, divided by the number of shares of stock issued. In most small corporations, there is usually…