Authorized and issued shares

Fractional shares issued and authorized

Some states permit fractional shares to be issued but some states forbid this. Whichever case, fractional shares are harder to keep up with.

How to have more shares authorized and issued in the future?

Mary decides that she wants more shares issued and authorized so she can offer some to Stacie. Mary needs more shares to be authorized by the state. Increasing the number of authorized shares and issued shares are possible but there are many forms to fill out. The process of increasing number of shares authorized and issued can be complicated and varies from state to state. There is also a fee associated with filing more forms to the state.

Because of this a corporation may do better to request the state to authorize many shares at the inception of the corporation even though only a few shares may be issued to the original stock holder or the business owner. Mary should have originally requested that the state authorize 1,000 shares and then issue 100 shares to herself at the inception of the corporation. Then later, Mary can issue 50 shares to Stacie for as an investment.

Other factors deciding how many authorized shares and issued shares a corporation should have

When it comes to deciding on how many shares of stock of the corporation will be authorized and how many issued, there are other factors to consider.

Incorporation fees based on the number of shares authorized and issued

Check with your state’s corporation authority as to fees involved, both at the inception of the corporation and annually. Some states base fees on the number of shares authorized and/or issued, regardless of the value of each share. If that is the case in your state, do not overdo the number of shares authorized and issued if that is going to create a significantly larger annual fee that has to be paid to the state.