Legal Question in Business Law in California

First, remember that California is a community-property state, so your wife may already have a significant ownership interest in the corporation, even though she is not a registered owner on the corporation's stockholder register.

Stock is transferred by making entries in the corporate secretary's register. There are two basic ways: you can transfer existing shares standing in your name, or you can cause the corporation to issue new shares to her.

In most cases, especially where the corporation is issuing new shares, the new shareholder should pay fair value - money, services, or things - to the issuer or transferor. However, you could transfer shares to your wife without full consideration being paid, either as a gift or in recognition that she has a community-property interest anyway.

If the transaction is between the corporation and your wife (issuance of new shares) there will be bookkeeping entries in the corporation's balance sheet as well as the secretary's shareholder record. If the deal is just between the two of you, you receive the consideration paid (if any) andonly the secretary's records are affected.

A corporation with one shareholder need have but a single director. When it has two shareholders, it must have at least two members on its board of directors, but these need not be the shareholders themselves (but they usually are). With three or more shareholders, a corporation must have at least three directors.

Any change in the identity or number of directors triggers a requirement to file a current Statement of Information with the California Secretary of State.

I would recommend that you get one of those paperback self-help law books on how to form and manage your own corporation. Also, if you don't already have someone who knows bookkeeping including handling matters relating to the balance sheet and tracking equity, maybe you should have a review of your books by a CPA.