Articles Tagged with Silicon Valley business law attorney

AdobeStock_67958307-300x187Delaware has long been known as a popular state for incorporation of a new business. Some entrepreneurs think this is solely because of tax benefits, but there are many legal and practical benefits to incorporating a new business in Delaware. Here are some of the most common:

Management Friendly

The Delaware General Corporation Law is considered to be friendly toward the management of corporations. There are many specific provisions that help corporations run more efficiently: for example, Delaware corporations have the option of using cumulative voting, while other states make it compulsory for corporations that are not publicly traded. The DGCL also allows for shareholder approval of mergers without separate votes in each class of outstanding stock. Special meetings can be limited to a call by the Board of Directors, which prevents the complications associated with shareholders calling special meetings. Finally, the DGCL embraces new technologies and now allows corporations to use distributed ledgers or blockchains to create and maintain the corporate records required by law. These and other provisions help corporations run more efficiently under Delaware state law.

Articles of Incorporation are an essential requirement of forming a California startup corporation. This document is filed with the California Secretary of State’s office and establishes the corporation as a legal entity as well as certain key facts about the corporation, including the name of the corporation, its principal place of business, the name and address of its registered agent, the purpose of the corporation, and others. One of the most important decisions that founders are faced with when filing an Articles of Incorporation is how many shares of stock to authorize. There are many considerations that should be addressed when making this decision, so it is important for anyone considering forming a corporation to discuss their circumstances and goals with an experienced Silicon Valley business law attorney.Articles-of-Incorporation-300x225

Determining how many shares to issue can be complicated

Authorizing shares allows a company to divide ownership among many different parties and also makes it possible to raise capital. As such, it is important to authorize enough shares to accommodate growth but not so many as to make individual shares nearly worthless. Importantly, not all the shares that the Articles of Incorporation authorizes have to be issued, so a company can reserve shares for issuance at a later date. Some of the reasons it may be beneficial to authorize more shares than you plan on issuing include the following: