Legal Question in Business Law in North Dakota

Aggregate number of shares for articles of incorporation

It is relatively easy to incorporate in ND, my only question for the articles of incorporation is:

How do I determine the aggregate number of shares that the corp will be authorized to issue? What quidelines should I use? There are 2 equal owners that will run a small retail store. Is it more beneficial to start with a smaller number like 2 - 10 shares or to take advantage of the minimum fee for up to $50,000 and start at a larger number like 20,000 - 50,000 shares? What does the aggregate # of shares effect?


Asked on 7/10/03, 3:50 pm

1 Answer from Attorneys
Lawrence Graves Coolidge & Graves PLLC

Re: Aggregate number of shares for articles of incorporation

Most corporate lawyers would likely tell you to authorize the largest number of shares obtainable for the standard (minimum) incorporation fee. Then, you would actually issue a total of 100 shares that reflect the percentage ownership of the stockholders. The remaining "authorized but unissued" shares have no present effect, but permit the later issuance of shares if a new stockholder buys into the company, etc.

That said, you would be better served by having a corporate lawyer form your corporation. Various procedural omissions can result in a court disregarding the corporate form and holding the "stockholders" personally liable for the obligations of the defective corporation. Shop around and you will likely find a lawyer who will charge only a few hundred dollars (over and above the filing fee) to set your company up properly with a corporate book, stock certificates, organizational minutes, etc.

Best wishes,

LDWG

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Answered on 7/10/03, 4:32 pm


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