Types of Companies > C-Corporation (Stock) > Types of Stock

Types of Stock

Stock Shares and Values

The articles of incorporation must state the maximum number of stock shares that can be issued by the corporation. You are not required to actually issue the maximum number of shares. You may choose to issue fewer shares than the maximum number allowed. Issuing fewer shares provides some flexibility should you wish to bring in other investors. Otherwise, if additional shares were needed, the articles of incorporation would have to be amended. There is no maximum on the number of shares that can be authorized, but be advised that some states base their annual corporation fee on the number of shares authorized.

In some states the "par value" must be stated. This value is simply for accounting and tax purposes, since stock can be sold at whatever price a buyer is willing to pay. The issuing corporation may not sell stock for less than its par value. Because some states base their annual corporation fee on the total par value of the stock, it is advisable to choose a low par value, such as $.01 or even $.001.

The Sale of Stock

The sale of stock is subject to federal and state securities laws. Generally though, if you are not advertising the sale and are dealing only with a small number (less than 35) of knowledgeable and sophisticated investors or people you know personally, then you will be exempt from the regulations. If, however, you are seeking to raise a significant amount of money from a large number of investors, you should consult with an attorney.

Types of stock and other securities issued by corporations

The most basic level of stock is called "common stock." Larger more complex organizations have differing classes of common stock.
Preferred stock is a different classification of stock and generally has greater rights over the common stock when it comes to receiving dividends and/or assets from the corporation (in case the corporation is liquidated). Preferred stock can also have special voting characteristics, conversion or redemption rights, and other features.

Warrants:
Convertible debentures

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