Legal Question in Business Law in California
Corporation stock split
Does this language in amended articles create 10 million or 20 million shares, assuming there are before the amendment 10,000,000 share authorized in original articles of which 5,000,000 have actually been issued to shareholders?
'The Corporation is authorized to issue only one class of shares of stock; and the total number of shares which this Corporation is authorized to issue is 10,000,000 shares of Common Stock, with no par value. Upon amendment of this article to read as herein set forth, each outstanding share of Common Stock is split and converted into 100 shares of Common Stock.'
3 Answers from Attorneys
Re: Corporation stock split
An "outstanding" share means a share that has been issued and not returned or cancelled in any way. If you want a more detailed answer I would need to discuss this matter with you in detail. I hope that helps.
Re: Corporation stock split
Authorized shares is the number of shares the corporation can issue (10,000,000 in your example). Issued shares is the number the corporation chooses to sell/issue to shareholders (5,000,000 in your example). Outstanding shares is the number of shares issued that have not been repurchased by the corporation (probably 5,000,000 in your example but depends on if the corporation has purchased any of the issued shares).
Is this the clause in the amended articles or is part of this in the original articles and the last sentence added via the amended articles? Is there any more language in the amended articles? It is difficult to give accurate advice with limited information. If there are 5,000,000 shares issued and those shares are now worth 100 shares each there would be 500,000,000 shares issued.
It sounds like there might be a bigger question or issue behind your question. Feel free to contact me to discuss further.
Re: Corporation stock split
I can tell you that you this is only a small part of the challenge you have. Unless you have an attorney to fight for your interests, the answer may end up being whatever someone else decides.
Let me know if you want my help.
Best,
Daniel Bakondi, Esq.
IMPORTANT:
No attorney-client nor confidential relationship is created through this communication. You may not rely in any way on this communication, and nothing herein constitutes legal advice nor legal opinion. Your issue may be time sensitive and may result in loss of rights if you do not obtain an attorney immediately.
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