Legal Question in Business Law in New York

I am planning on starting a business and have a question about ownership. I want it to be a corporation, and I will need investors, but I want to maintain at least 51% of the ownership. There is no way I will have 51% of the needed capital to start the business, so how do I raise money, issue shares, and still maintain 51%? I was thinking (for the sake of even numbers) I incorporate, and issue 100 shares at $0.01 each. I then buy all 100 for $1.00, then sell the remaining 49 shares to investors at the amount needed to start the business. So 1 share could go for a few thousand dollars. (The actual amount of shares will likely be a different number).

Is this possible, and if not, how can I still accomplish my goal of maintaining control and ownership of the company?


Asked on 1/26/11, 11:56 am

2 Answers from Attorneys

Engineering your own capital structure will likely prove messy and may deter many investors. One other possibility is to use convertible notes to avoid valuation issues and keep a clean capital structure until such time as the business is on stronger footing.

In addition, depending on the industry you are in, there are customary terms that some investors may look for and even insist on. You should consult with an attorney admitted in New York that practices with startups to make sure you properly set up the company and also take advantage of Tax benefits.

Roman R. Fichman, Esq.

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Answered on 1/27/11, 1:42 pm
Carlos Gonzalez Gonzalez Legal Associates PLLC

From the sound of it You will need a great deal of help setting this corporation up. Structuring a corporation and planning to get financing can be very complex and can require professional legal assistance.

Our attorneys are highly trained in corporate structuring and development and are able to provide such assistance at reasonable rates. If you're interested in hiring an attorney ton assist you with your corporation contact us at 212-405-2234

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Answered on 2/06/11, 2:10 am


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