Originally from:
Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Hardcover
Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Electronic
Preview Page
CHAPTER 46
ISSUES SURROUNDING ISSUANCE
OF SHARES AND SECURITIES
Section
§ 46.01 Authorization
§ 46.02 Technical Recording and Record Keeping and Reporting
Requirements
§ 46.03 Stock Redemptions and Liquidations--Stock Redemptions
§ 46.04 Preemptive Rights
§ 46.05 Dissolution
§ 46.06 --Voluntary Dissolution by Shareholders
§ 46.01 Authorization
The initial consideration for any company with respect to the issuance
of shares is how many shares are to be authorized. This is a more
significant issue than may first appear to business persons because they
often fail to realize that the articles of incorporation may limit the
number and type of shares which the business may issue in the future.1
The articles of incorporation are required to set forth the aggregate
number of shares that the new corporation is authorized to issue.2 This is
the maximum number of shares that the corporation may sell unless the
articles are amended to authorize more shares. While the aggregate
number of authorized shares must be listed, no other information is
required about the shares.3 Additional information, however, may prove
beneficial to the directors and shareholders in the future.
While the articles of incorporation are not required to authorize more
than one class or series of stock, it may be prudent to anticipate the
future needs of the business.4 A business should consider authorizing
several classes and series of stock as well as designating various rights
and preferences5 even if there is no present intent to issue more than one
class at the time of incorporation.6 The articles may also simply authorize
undesignated classes or series of stock for which the terms such as
common or preferred, voting or nonvoting, will be defined by board
resolution at a later date. While the articles are not required to state a par
value,7 a business should attempt to foresee whether its future or present
operations will involve states which may not respect Minnesota’s
statutory presumption. Other states may also impose franchise taxes
based on authorized capital (shares). In these states, the par value of
authorized shares determines the franchise tax.
Roger J. Magnuson is a Partner at Dorsey and Whitney, LLP, where he serves as Head of the National Strategic Litigation Group and has practiced since 1973. He has been recognized as one of the top trial lawyers in the United States by major national and international publications, including Chambers International Guide to American Lawyers, which profiles the top 500 trial lawyers in the United States, Best Lawyers in America, Who's Who in American Law, and Who's Who in America. Mr. Magnuson was also recognized by a Journal of Law and Politics' survey for Judge's Choice "Wins Most Cases."
Some high profile cases that he has litigated include representation of the Florida Senate in the Bush v. Gore election controversy in 2000; and representation of the Plaintiffs in the widely publicized and studied Mall of America case. For several years he has represented, among other persons and entities, the Minnesota Twins and Major League Baseball principals and players in litigation; and has litigated national and local cases in federal and state court venues. He has appealed before the Supreme Court in a number of cases; as well as the Minnesota Supreme Court. He has authored several articles and 7 books.
Richard A. Saliterman is a Principal in Saliternan & Siefferman P.C., a full-service firm in Minneapolis established in 1976. Mr. Saliterman is a leading expert on corporate business matters, and is the author of several publications on business start-ups, franchises, and trademarks. Mr. Saliterman is the former National Judge Advocate for the U.S. Navy League, based in Washington D.C.
Contributing Editor:
Amanda Chang
Contributing Authors:
Alecia Anderson
Seth Back
John Baker
Shannon Berg
Constatin Burachek
Benjamin Carpenter
Ryan Check
Carl Christensen
Peter Fear
Michael Frasier
Aaron Hall
Catherine Hanson
Paul Harman
Amy Ithlan
Michael Kern
Chris Kuhlman
