Legal Question in Business Law in Arkansas

shares/promissory note

I am incorporating- I have two partners...we are authorizing 100,000 shares...20,000 of which will be common stock...par value of $1.00...we are loaning the incorporation $20,000. We expect the corporation to pay us back with interest (payment plan). What I can't seem to understand is how to say this in the promissory note. Since the shares are one dollar...the we each get approx...6666 give or take...each. So does this mean we are buying the shares? I am very confused.

Thank you your help will be greatly appreciated!

Ragen


Asked on 10/28/06, 6:45 pm

1 Answer from Attorneys
Alan Crone Crone & McEvoy, PLC

Re: shares/promissory note

I highly recommend getting a lawyer to help you draw up the agreements. There are a number of ways to structure the arrangement you describe, each have certain tax and legal ramifications. Do not be penny wise and pound foolish. Getting a lawyer involved now can greatly reduce the cost of dissolving the partnership in the event one or more of the partners want out, as well as the cost of taking money out or selling the company if things go real well.

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Answered on 10/28/06, 10:53 pm


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