Alabama Authority to Issue Additional Shares

State:
Multi-State
Control #:
US-CC-12-1931
Format:
Word; 
Rich Text
Instant download

Description

This form may be used by a company's Board of Directors to allow for the purchase of additional stock beyond the original agreement with a second party. The form specifically states the conditions under which the additional purchase will be allowed.
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FAQ

The number of authorized shares can be changed by way of a vote from shareholders, typically during the annual shareholder meeting.

If a company wants to increase its authorized share capital, it has to amend its corporate charter, which usually requires a vote from its shareholders. This shareholder approval is important because a company issuing more shares will ultimately dilute the ownership of its current investors.

Issuing of extra shares will require a resolution to be passed by a general meeting of the company shareholders. The only way of avoiding diluting the company further by issuing shares to new investors is by existing shareholders taking up the extra shares on top of their own.

The number of authorized shares can be increased by the shareholders of the company at annual shareholder meetings, provided a majority of the current shareholders vote for the change.

In California, a corporation must authorize at least one share but may authorize any number.

When companies issue additional shares, it increases the number of common stock being traded in the stock market. For existing investors, too many shares being issued can lead to share dilution. Share dilution occurs because the additional shares reduce the value of the existing shares for investors.

Capital stock may be increased through the following acts: By increasing the number of shares and retaining the par value; or. By increasing the par value of existing shares without changing the number of shares; or. By increasing the number of shares and increasing the par value.

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Alabama Authority to Issue Additional Shares