I guess very basic question. Me and my wife formed C-corp in DE with initial 1500 shares. I won 1000, she owns 500. We want to change a number of shares and distribution. What are the step to get to 5000 shares, 4500/500 distribution. What papers do I need to file?
2 Answers from Attorneys
The directors need to adopt a resolution recommending the change in authorized shares and the shareholders need to approve it. (Yes, even if it is just the two of you, you need to prepare the paperwork for these corporate decisions. This paperwork, however, does not get filed; it is kept with the corporate records.) Then you complete and file a Certificate of Amendment to amend the portion of the Certificate of Incorporation that listed the number of authorized shares. There is a fee associated with this.
My colleague is correct, however the process is more involved as in addition to what my colleague described agreements evidencing the new grants of shares will also have to be executed for both you and your wife and the books of the corporation and stock ledger will have to be updated.
Beyond the basic formation, these types of changes require knowledge as there is a very good likelihood that your application will be rejected by the DE DOS and the refiling fees might be more than the cost of hiring an attorney to do this right.
Reach me directly. It should only take about 2 - 3 attorney hours to do this right. In addition, you should re-evaluate why you and your wife own a c-corp to begin with. You may be better off with a different type of entity. This review would be included free of charge.
Roman R. Fichman, Esq.
www.TheLegalists.com │ @TheLegalist
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