How to Issue New Shares of Common Stock
Common stock is the stock that gains an investor voting rights on shareholder issues. A corporation states the total amount of shares of stock for the company when they send in their application for corporation to the Secretary of State. This amount is typically high, and not all stocks are issued at once. Many shares are held in reserve and issued from time to time when the company needs to raise some capital.
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Instructions
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Decide on the funds that are needed. This will help you decide on how many shares of stock to issue. The price of the stock will be based on the price of your company's stock that is already on the market or on an investment banker's view of how much the stock is worth after doing a thorough check of the finances and operations. The investment bankers are referred to as underwriters. If you have not issued any stock yet, the price is based on the amount set when your corporate application was filed with the Secretary of State's office.
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Obtain approval from the board of directors to issue new stock to the public if you are already in operation. If just starting out a business, approval is not needed, and in most cases a board of directors will not be set up yet.
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File a registration statement. This is obtained from the SEC. On the statement, besides the basic company information, you will need to state how many shares of common stock you want to issue. You must file at least 20 days before you are going to release the stock.
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Notify investors if you are searching for a quick sale to one entity or want an investment bank to buy the stock and reissue to the public for you.
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Offer shares to shareholders. This is another option with the issuing of the new stock. You may offer shares based on the percentage of shares that each person or entity already owns.
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Allow the issue of stock to go public once the application is processed. If you prefer to have a public sale instead of allowing the stock to go to shareholders, investors, or banks, then allow the stock to be sold on the open market after the SEC approves the application.
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References
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