Creating and Issuing Stock Certificates in Washington DC

Starting a corporation or an LLC is a great way to incorporate a business in Washington DC. These structures allow for the personal protection of the investors as well as allows owners to know exactly who is owning and operating the company.

When creating a corporation, it is necessary to issue stock. Stock informs investors of their percentage of ownership in the company as well as assists them in making decisions about the company’s future. An IPO lawyer could help corporations and LLCs to create and issue stock certificates in Washington DC. This includes determining how much stock to create and how much would go to each investor.

What is Stock, and How does it Affect a Business?

In simple terms, the holders of stock own a percentage of the company. For example, if a corporation issues 100 shares of stock, and Ms. A owns 40 shares, Ms. A owns 40 percent of the corporation. It is important to note that this only applies when the company takes on the form of a corporation or an LLC.

When creating a corporation in Washington DC, it is necessary to disclose the issuance of stock certificates. The Code of the District of Columbia § 29-304.01 states that the articles of incorporation that are a necessary part of business creation must include information concerning stock. This applies regardless of whether the shares are uniform in nature or if the corporation intends to create classes of stock.

The parties who own stock play a major role in the ongoing operation of a corporation. Stockholders can vote on a variety of business decisions, from hiring a board of directors, to authorizing a merger, to issuing dividends. In addition, stockholders have a right to collect company profits in proportion to their ownership of shares. An attorney could provide more information about the concept of stock and how it affects a corporation or LLC during the startup phase.

Parties Who May Receive Stock

As discussed above, stock represents a percentage of ownership in a corporation. Because of this, corporations typically issue stock to initial investors. The amount of stock an initial investor receives typically represents the percentage of the start-up funds that these investors provided for the company.

However, business owners also have the option of providing stock as an incentive to bring in talented employees or executives. This can be in the form of a direct transferal or as an option for a worker to purchase shares in the company. When using this option, it is necessary to comply with the relevant District laws concerning reporting the resulting changes in corporate ownership structure. An attorney in Washington DC could help a startup business create and issue stock certificates to new employees and initial investors.

Contact a Lawyer to Learn More About Creating and Issuing Stock Certificates in Washington DC

The issuance of shares is a vital part of the creation of any corporation or LLC. In fact, the articles of incorporation that establish the company must declare the number of available shares and who will own these options. The stock represents a share in ownership of the corporation and entitles holders to a portion of profits as well as votes concerning company policy.

Therefore, taking the proper steps in creating and issuing stock certificates in Washington DC is of the utmost importance. Reach out to an attorney today to discover more about the role that stock plays when starting a company.