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Who Are Stock Certificates Issued To and When?

Q: We are a Delaware C Corp registered as a Foreign Entity in Colorado our home state and we need to figure out the answers to the following questions with regards to stock certificates.
1. Who gets stock certificates issued and when?
             My assumptions are that cash investments DO get certificates, warrants DO NOT.
             Founders and Employees with vesting schedules DO NOT get certificates, until a portion of stock is vested.

2. Do the buy and print your own certificates follow the normal process?
3. Do private C Corps file capitalization stables with the SOS?

A (Jason):

It’s a pretty simple answer, really.  If you buy the stock, you get the certificates.  So cash investors do get certificates.  Warrants and options are securities that provide the holder to exercise them later by paying for the stock at a pre determined strike price.  At the time of exercise, money is paid by the holder to the company for the stock subject to that warrant or option and then a certificate is issued.  The options can not be exercised until vested, as you suggest.

i’m not sure what “buy and print” your own certificates mean, but there is no form that you have to follow.  It just needs to be signed by the President and Secretary of the company.  Furthermore, cap table are not filed anywhere.  You may keep this information private.

 

December 11th, 2012 by     Categories: Company Creation, Fundraising, General QandA, Legal, Stock Options    
  • DaveJ

    Worth mentioning that there need to be *authorized* shares available for warrants and options. But no certificates.

  • joewallin

    Be careful if you issue your own stock certificates without a lawyer’s help. You need to make sure the certificates bear the securities law legends.

    • http://www.feld.com bfeld

      Absolutely correct.