How do i increase the number of shares my corporation is authorized to issue?
My corporation is a C corp in Idaho. I am currently the only owner. The number of shares I'm authorized to issue is 20,000. I need to increase the number of shares my corporation is authorized to issue so that I can sell my shares for less. What forms to I need to file and what wording should i use to do this?7 years ago - 2 answers
You can file an amendment to increase the authorized number of shares in your articles of corporation, which you should have filed in the state of Idaho. If you have lost your copy of your articles, they are on file with the state and can be ordered.
There is no legal restriction on how much you charge for your shares so unless the issue is you want to sell in smaller denominations so that you raise more money selling a smaller stake of your company, such an amendment should not be necessary. Also remember in terms of determining voting strength that voting is determined in respect of shares outstanding, not shares authorized. So, for instance if you have 20,000 shares authorized and you've issued yourself 5,000 shares and you then increase your authorized shares to 40,000 and sell 10,000 shares -- you haven't sold 25% of your company, what you've now down is convert yourself from a 100% owner (5,000/5,000) to a 33% owner (5,000/15,000).
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Generally, this is filed with the State you reside in. Your company attorney can help you with this.
Your question is odd in that if 20,000 shares are issued/outstanding then one share represents in value only 0.005% of the company. If the company is worth $1,000,000 then the per share value is $50. How can this be too low?