legal corperation points

Please explain in a simple way. It will really help.


1. What is Capitalization Table?
2. What is authorized and issued shares?
3. What is Articles of Incorporation.
4.Why should I plan for distributing or reserving shares?
5. What this question means: Terms on partnership termination? What will happen to our shares?


Thanks

 

1. A Cap Table lists the various kinds and numbers of stock or securities that have been issued and outstanding (e.g., common stock, preferred stock, stock options, warrants).
2. A corporation authorizes shares to be issued to shareholders. A closely held corporation (not a public corporation) typically authorizes more shares than it initially intends to issue to the initial shareholders (often times on a 10 to 1 ratio, e.g. if it plans to initially issue 100 shares to shareholders it might authorize 1,000 shares). By doing so, it holds extra shares in reserve for possible further use (issued to new shareholders, investors, employee incentives, etc.).
3. The Articles of Incorporation typically get filed with the Secretary of State's office for the state in which the business is incorporated. The Articles are basic information about the corporation and the rights and obligations of shareholders, etc. This information is made public so that the public has access to basic information about the corporation. Articles of Incorporation do not include a list of the shareholders of the corporation, which may change from time to time.
4. Since it typically does not cost the corporation any more to hold stocks in reserve for future use for possible additional issues to shareholders, investors, employees, etc., it is a common practice and saves the corporation from trouble of having to do so in the future in the even that it issues all the shares it authorizes.
5. The language referenced is worrisome, since corporations are not partnerships and partnerships are not corporation. More information would be needed to comment.

Needless to say, stocks are securities and highly regulated by states and the federal government. You should consult with a business attorney. I am not your attorney, you are not my client.

Hope that helps some.