Are there any filing requirements when issuing new shares in an S-Corp?

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Are there any filing requirements when issuing new shares in an S-Corp?

My company is an S-Corp. I am the sole owner and I want to add my wife as a shareholder. She will also work for the company (working with clients and providing marketing expertise internally). The Articles of Incorporation state 19k shares authorized with 10k shares issued to me. Can I issue shares to my wife (up to 9k) for an arbitrary value (e.g.$1 and/or in consideration of the value she’s bringing to the company) by documenting that I (as sole Director and shareholder) have approved the new issue? Would I need to file anything with the State?

Asked on February 21, 2012 under Business Law, California

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

For issuance of shares to your wife as a shareholder in your S corporation, she needs to provide something of value under the law. Likewise there needs to be a shareholder's meeting regarding the value (consideration) to be given for the shares, minutes for the meeting along with notice for the meeting and issuance of actual shares.

Some consideration could be shares in exchange for wages by your wife.

Nothing needs to be filed with the Secretary of State. I suggest that you consult with a business attorney further about your question so that you can get the paperwork in proper format.


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