Calculating And Issuing Shares of Stock

In order to properly complete your corporate documents, you will need to determine the number of shares of stock to be issued to the various shareholders. As a small business, most small businesses initially authorize either 1,000 or 10,000 shares of Stock. It is recommended that you do not issue all of such stock upon the initial issuance. Stock that is not issued is held in reserve. It does not determine percentage of ownership, but leaves additional stock in reserve in the event that you agree to add additional shares. You can always amend your Articles of incorporation to authorize additional shares of stock, but this requires additional state filings and related fees.

In the usual situation, where there are three shareholders for example, each who own one-third of the stock of the Corporation, you should issue each shareholder an equal number of shares, for example 100 shares each, leaving 700 shares in reserve. Where percentage of ownership is more complicated, you should use the same general principals to calculate the actual number of shares to be issued. The main point being that it is advisable to leave shares in reserve.

Our Corporate Kit E-Book includes printable share certificates that are automatically completed for you to print out using our automated document creation system.

Additionally, Alabama Law permits you to issue shares without certificates if properly authorized by the Board of Directors and if statements are provided to shareholders. Our Corporate Kit E-Books also include documents to authorize you to issue shares without certificates and contains a notification of shareholdings to be provided to shareholders in lieu of issuing official share certificates.

With Regards to issuance of shares without certificates, Alabama Statutes state as follows:

10-626. Shares without certificates A. Unless the articles of incorporation or bylaws provide otherwise, the board of directors of a corporation may authorize the issuance of some or all of the shares of any or all of its classes or series without certificates. Notwithstanding such authorization by the board of directors, every holder of uncertificated shares is entitled to receive a certificate that complies with the requirements in section 10-625 and, if applicable, section 10-627, on request to the corporation. The authorization does not affect shares already represented by certificates until these certificates are surrendered to the corporation. B. Within a reasonable time after the issuance or transfer of shares without certificates, the corporation shall send the shareholder a written statement of the information required on certificates by section 10-625, subsections B and C, and, if applicable, section 10-627.