There is no simple, \u201cone size fits all\u201d answer to how many shares you should authorize when you form a corporation. Instead, you will need to discuss your goals with a Silicon Valley corporate lawyer who can help you think through all of the relevant considerations.<\/p>\n
What are Articles of Incorporation?<\/strong><\/p>\n A corporation\u2019s founders file Articles of Incorporation with California\u2019s Secretary of State to establish the business as a new corporate entity in the state. Your articles will contain important information about the corporation, such as:<\/p>\n New business owners can use fill-in-the-blank Articles of Incorporation<\/a> and file them through the mail, in person, or electronically. Most of the information in the Articles is straightforward, so the forms should are not overly burdensome or time-consuming to complete<\/p>\n However, the Articles of Incorporation will also request information about how many shares you are authorizing. A share represents a percentage of ownership in a company. If a corporation has 100 shares, then someone who owns 50 of them owns half of the corporation. When a corporation has millions of shares, someone who owns a handful owns only a tiny piece of the company.<\/p>\n How Many Shares Should You Authorize?<\/strong><\/p>\n California law<\/a> requires that a corporation authorize at least one share, but you can authorize more. The number you should authorize is a topic you should consider with your Silicon Valley corporate attorney. Generally, there are a few considerations we go over with clients:<\/p>\n Helpfully, a corporation does not need to issue all the shares that it authorizes. Instead, the corporation can retain some to issue later, when business conditions warrant it. This fact can take some of the pressure off when deciding how many shares to authorize when filing your Articles of Incorporation.<\/p>\n Discuss Share Authorization with a Silicon Valley Corporate Lawyer Today<\/strong><\/p>\n Positioning your startup for growth in a crowded marketplace requires careful planning and sound legal advice. At Startup Company Counsel, our attorneys have years of experience advising entrepreneurs about business formation issues, including share authorization and issuance. If you have a question, we are available and ready to hear from you.<\/p>\n To schedule an appointment with one of our attorneys, please call 408-441-7555 or submit an email using our online contact form.<\/a>\n
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