If you incorporate a business, are you supposed to issue stock certifcates to the shareholder owners?
Monday, June 8th, 2009 at
6:46 am
So if you incorporate, what is the proof that you own the company? When you file the corporation, can you list anyone down as an owner without issuing stock certificates? Is this fraud?
Tagged with: fraud • issuing stock • proof • stock certificates
Filed under: Financial Fraud
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Incorporation is a complicated issue.
1. Your question as to whether you are required to issue "physical" stock certificates will depend upon your jurisdiction, but more likely than not you do not have to issue the tangible certificate.
2. Proof that you own the company will be that you are the majority (only) shareholder.
3. I'm not really sure what you are asking in this question. If you are asking that if you can pick any person and list them as the majority shareholder without their prior consent, then the answer is yes, this is a fraud. If you are asking if you can list a person as a shareholder without issuing the certificates, see answer 1 above.
For a very quick lesson on incorporating a business , you have to be aware that incorporation does not "protect" you from unlimited liability. You may incorporate as a limited liability company (where you are limiting the liability of shareholders to their equity investment) but this has come under intense scrutiny in the past few years and several cases have been resolved where an unlimited liability standard has been held by the courts.
Usually that is something that you need to discuss with your Attorney or CPA before you incorporate, and according to the laws of your state. I think, the amount of the stock that is being issued relates to the amount that the investors had paid and the verbal/written agreement that you have with the investors.
My friend incorporated his privately owned business, and he didn't have to issue any stock. He did it to protect his personal assets (home, car, savings account) from creditors of the business.