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What If I Never Issued Stock for my Company? [VIDEO]

Posted by Katherine L. Taylor, Attorney | Nov 18, 2020 | 0 Comments

Let's say you're a business owner who started a corporation 10 years ago, along with another owner, and you're getting ready to sell. Fortunately, you've found a buyer, and you realize that you never issued stock. Is that a fatal flaw?

Probably not, but it's going to take some work for you to be able to actually sell that stock to another party.

I can help you do that. First, I would review your articles of incorporation, along with any bylaws adopted by you or the board, as well as the regulations for your state (I'm registered and licensed in Maryland and most of my clients are Maryland corporations). If you have a buy-sell agreement or stockholders agreement, I'd need to review that, because any issuance of stock must be in compliance with all of those documents.

All of those documents should be consistent; if they're not, they would need to be revised. Once they all line up, you can then issue the stock that should have been issued 10 years ago. If you've made any transfers of stock over time, all of the transfers have to be recognized in the actual transfer ledger, so you'd start out with your original issuances and then issue the transfers until the actual stock percentages are in compliance with all of the documents and the current state of your business.

This mistake happens more frequently than you might think, and it's not a fatal situation; it can be resurrected.

If you are in this situation, please give me a call. I can let you know what might need to be done and hopefully get you to the point where you can sell your business. Visit taylorlegal.com to get in touch.

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KATHERINE L. TAYLOR, ATTORNEY AND CPA

5850 Waterloo Rd

Suite 140

Columbia, MD

21045 443-420-4075

443-420-4075 (fax)

About the Author

Katherine L. Taylor, Attorney

Katherine founded Taylor Legal after serving for 10 years as Senior Assistant County Solicitor for Howard County Government, and 7 years as a commercial litigator at Whiteford, Taylor & Preston, a premier law firm in Baltimore, Maryland.

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