articles of incorporation
I am establishing a corporation in MD.
What is the reason for some to value their company stock very low - such as $.01 per share, and other value it more sensibly? Is their a tax issue I should be concerned about when entering this value?
1 Answer from Attorneys
Re: articles of incorporation
The reason you would value the shares of stock so low is because of the potential for liability. For example, say you have 100 shares of stock outstanding and valued at $100.00 per share in your Articles. With no other assets in the corporation, the corporation has a value of $10,000.00 in stock. If you value the corporate stock at $1.00, issuing 100 shares would place assets into the corporation of $100.00. If you are then sued, the plaintiff can sue the corporation for up to the total value of its assets -- $100.00 or $10,000.00.
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