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In private companies with more than one class of share and public companies, the directors need authority to issue shares. This authority can either be given in the articles or by an ordinary resolution of the shareholders.
A shareholder is any person, company, or institution that owns shares in a company's stock. A company shareholder can hold as little as one share. Shareholders are subject to capital gains (or losses) and/or dividend payments as residual claimants on a firm's profits.
What to Think about When You Begin Writing a Shareholder Agreement.Name Your Shareholders.Specify the Responsibilities of Shareholders.The Voting Rights of Your Shareholders.Decisions Your Corporation Might Face.Changing the Original Shareholder Agreement.Determine How Stock can be Sold or Transferred.More items...
The Companies Act of 1993 and the company's own constitution govern the company's right to issue shares. Depending on the guidelines in the constitution, or in the Companies Act, the organization's board may issue as many of the authorized shares as they desire.
Unless you indicate differently in your articles of incorporation or by-laws, your corporation's board of directors can generally issue shares whenever it wishes, to whomever it chooses, and for whatever value it decides.
To issue stock in a corporation, you can use a simple bill of sale. Stock is issued to fund the corporationin the Articles of Incorporation, the corporation sets the number of shares the corporation is authorized to issue. The corporation then decides how many shares of stock it will initially issue.
In some cases, a company will own stock in itself. These shares are known as treasury stock. Unlike typical shares, treasury stock does not grant voting rights or the ability to receive dividends. If a company decides to sell treasury stock, those shares will convert to outstanding shares.
Corporate StockholdersWhoever owns any of the outstanding stock of a company is legally an owner. A C corporation can have an unlimited number of owners, and publicly traded corporations such as Apple, IBM or Wal-Mart have many thousands of shareholder owners.
A Shareholders Agreement is a contract concluded between shareholders to a company that formalizes the relationship and governs the duties and responsibilities between all stakeholders to the company.
Important provisions within a Shareholders' Agreement include the decision-making powers of directors and shareholders, restrictions on the sale and transfer of shares, and the process for resolving disputes. If you're the only owner of your business, then you won't need to worry about a Shareholders' Agreement.