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Will Your Corporation be Seeking Outside Investors by Selling An Ownership Interest in the Corporation While, at the same, you retain control of the Corporation?

Recapitalization of a Corporation and Stock Dividend

Complete the information requested and click submit and your request will automatically be emailed to Spiegel & Utrera, P.A. You can expect a reply from Spiegel & Utrera, P.A. within four business hours.

Many times a corporation will seek an investor but before it actually consummates that transaction, it increases the number of shares it has available to issue to investors. It is not uncommon for a corporation to recapitalize itself with 10 million shares. The proper way to consider this is to place a value on your company which includes your expectations of its profits, your ideas and the influence that you are exerting in making your company a success. Let’s say as a result of this, you value your company at $500,000. You then go out and recapitalize the company with 10 million shares. That would mean each share in the stock in the corporation has a market value of 5 cents then you would bring investors in at that rate and issue them shares. If a person was investing $10,000 in your corporation, they would receive 200,000 shares. However, during the re-capitalization process and before any shares are issued to an investor, you would want your corporation to issue you a stock dividend for as much as 60% or 70% of the shares of the corporation to yourself. This is a non-taxable transaction and protects you from losing your majority control of the corporation. So when we talk about recapitalization, we are also talking about a stock dividend.

Desired number of shares for the corporation to be recapitalized at:

100,000500,0001 million2 million
3 million4 million5 million10 million
20 million30 millionOther Amount:
 
Stock Dividend
 
Name of Existing Shareholders


Number of Shares Currently Held


 
Adding an Additional Class of Stock to Your Corporation

Generally corporations have one class of stock. But they may have different classes of stock. Please bear in mind, however, that a Sub Chapter S Corporation may only have one class of stock. However, having common voting and common non-voting stock are not considered two classes. Other classes of stock which you might consider having for a regular corporation are preferred stock and convertible preferred stock.

I have questions on recapitalization, stock dividends or adding an additional class of stock to my corporation. Please have an attorney call me to discuss these topics.

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Complete the additional information requested and click submit and your request will automatically be emailed to Spiegel & Utrera, P.A. You can expect a reply from Spiegel & Utrera, P.A. within four business hours.

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