Legal Question in Business Law in California

Re: Can shares of a corporation just be signed over?

It seems to me that you are setting yourself up for substantial accounting problems in trying to determine what sum of money represents 20% of the profits from a particular product, and this problem will exist whether there is one closely-held corporation or two as long as you are in full ownership and control of all of them (one or both), although I think the problems will be lessened if you have two entirely separate business entities.

The inherent problem is that there will be shared costs, including the value of your time. Without knowing all the facts and circumstances, I cannot give you situation-specific advice, but as a general rule I think it would be better either to buy out your investor completely and run the whole shebang as your own, or if you can't afford to do that, make her an equal but lesser partner in both or all products. Another alternative is to give her a certain amount "off the top" of sales of product #1 rather than try to figure 20% of profit - say 5% of gross sales revenue or $1.50 per widget. Revenue is much easier to calculate and substantiate than profit, and profit is also subject to manipulation by the control person, who may (for example) decide that the company needs to pay big Christmas bonusues, oriental rugs and original art on the walls, a BMW for the company car, etc. - and whoops! there goes the profit! - but isn't the president of the company doin' great!

Keep it simple and easily measurable, unless and until you can retain a CPA to audit the books and a lawyer to write (and later litigate) the agreement.

Re: Can shares of a corporation just be signed over?

Sounds like you need a license agreement and an agreement to transfer the stock, along with appropriate corporate and other formalities.

There is no "form"; you need to hire a business lawyer to custom draft contracts specific to your needs, and to provide the legal advice and counsel you need.