Authority to Issue Additional Shares
What this document covers
The Authority to Issue Additional Shares form allows a companyâs Board of Directors to approve the issuance of more stock beyond the original agreement with shareholders. This form specifies the conditions under which these additional shares may be purchased, setting it apart from other stock issuance forms by detailing earnout provisions based on performance metrics. It serves as an official document to ensure transparency and compliance when allocating additional shares to shareholders or investors, reflecting the companyâs intentions and obligations.
Form components explained
- Identification of the company and its purpose for issuing additional shares.
- Terms and conditions regarding the earnout provisions related to share allocation.
- Details regarding the performance metrics that trigger the issuance of extra shares.
- Limitations on the total number of shares that may be issued.
- Requirements for shareholder approval based on stock exchange rules.
When this form is needed
This form is typically used when a company plans to acquire additional capital through the issuance of extra shares. Scenarios include acquiring another company, rewarding stakeholders based on their performance, or restructuring existing stock. It is particularly pertinent when there is a need to incentivize existing shareholders in connection with financial or operational benchmarks defined in an acquisition contract.
Who should use this form
- Board members of corporations planning additional stock issuance.
- Corporate secretaries responsible for maintaining legal compliance and documentation.
- Shareholders concerned with the terms and conditions of stock issuance.
Instructions for completing this form
- Identify the company and provide the date of the resolution authorizing additional shares.
- Specify the conditions under which additional shares will be issued, referring to performance metrics.
- Clearly outline any limitations on the number of additional shares to be issued.
- Note any necessary approvals required from shareholders and indicate the voting outcome.
- Ensure signatures of authorized Board members are included for validation.
Notarization guidance
Notarization is not commonly needed for this form. However, certain documents or local rules may make it necessary. Our notarization service, powered by Notarize, allows you to finalize it securely online anytime, day or night.
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Make edits, fill in missing information, and update formatting in US Legal Forms—just like you would in MS Word.
Download a copy, print it, send it by email, or mail it via USPS—whatever works best for your next step.
Sign and collect signatures with our SignNow integration. Send to multiple recipients, set reminders, and more. Go Premium to unlock E-Sign.
If this form requires notarization, complete it online through a secure video call—no need to meet a notary in person or wait for an appointment.
We protect your documents and personal data by following strict security and privacy standards.
Typical mistakes to avoid
- Failing to specify the conditions under which additional shares are to be issued.
- Neglecting to outline potential limitations on share issuance properly.
- Not obtaining necessary shareholder approvals as required by corporate bylaws.
Benefits of completing this form online
- Convenient access to legal forms at any time without needing to visit an office.
- Edit and tailor the form based on specific corporate needs and circumstances.
- Reliability stems from having forms drafted by licensed attorneys, ensuring compliance with current laws.
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FAQ
Key Benefits. Increasing a corporation's number of authorized shares of stock creates new shares that can be issued to existing shareholders to increase ownership percentage or sold to new shareholders to raise additional capital for the corporation.
The number of authorized shares per company is assessed at the company's creation and can only be increased or decreased through a vote by the shareholders. If at the time of incorporation the documents state that 100 shares are authorized, then only 100 shares can be issued.
However, a company commonly has the right to increase the amount of stock it's authorized to issue through approval by its board of directors. Also, along with the right to issue more shares for sale, a company has the right to buy back existing shares from stockholders.
Take the amount targeted and divide by the share price estimated and you have the number of shares to be issued. Originally Answered: How do companies decide how many shares to issue? Private companies limited by shares must issue at least one share per shareholder when they are incorporated with Companies House.
Shares of a company registered in India can be issued to the general public (with SEBI approval) by a Limited Company or can be issued to persons and entities comprising of friends, relatives, business partners, etc., in case of a private limited company.
Share dilution is when a company issues additional stock, reducing the ownership proportion of a current shareholder. Shares can be diluted through a conversion by holders of optionable securities, secondary offerings to raise additional capital, or offering new shares in exchange for acquisitions or services.
The number of authorized shares per company is assessed at the company's creation and can only be increased or decreased through a vote by the shareholders. If at the time of incorporation the documents state that 100 shares are authorized, then only 100 shares can be issued.
Shares of a company registered in India can be issued to the general public (with SEBI approval) by a Limited Company or can be issued to persons and entities comprising of friends, relatives, business partners, etc., in case of a private limited company.
Understanding Authorized Shares 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.
