Business Formation, Share Expression, Numbers

Asked over 1 year ago - San Jose, CA

Suppose three people formed a business. In the business formation (incorporation?) contract, does the size of the share of each partner have to be expressed in finite percentages (34%, 33%, 33%), in which case the partners could have unequal shares, or could fractions be used (1/3, 1/3, 1/3), in which case the partners could have equal shares?

Attorney answers (3)

  1. Michael Charles Doland

    Contributor Level 20


    Lawyers agree

    Answered . You can do it either way. You can say "one third". This is the tip of the iceberg in company formation, and you may wish to explore what Avvo archives have to offer on the contracts and registrations involved in company formation. Get a CPA and an attorney with whom you can have a long relationship.

    The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may... more
  2. John P Corrigan

    Contributor Level 19


    Lawyers agree

    Answered . Attorney Doland is so correct when he says the tip of the iceberg.... I have a meeting tomorrow with 3 lawyers who want to form a new law firm......they cannot do it themselves as they are not business will need a business lawyer ton help you through the issues you have not even considered that younwill care about once you have been educated as to the issues you should be thinking about.....a lay person just does not realize the scope of issues that have tone dealt with...I am not trying tonbe condescending but I help doctors, lawyers and CPA's go through this process because they don't reallynknow what to focus on......just some advice to focus you and not scare you. Attorney Doland was just being brief in his iceberg analogy but it is so apt.....good luck to you!

    My answer is not intended to be giving legal advice and this topic can be a complex area where the advice of a... more
  3. Theodore Michael Hankin


    Contributor Level 11


    Lawyer agrees

    Answered . Actual shares represented by share certificates are only issued using numbers of shares, not percentages. The number of shares issued to each shareholder divided by the total number of shares issued gives the percentage.

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Small business structures

When starting a small business, there are many types of business entities to choose from. Each has its own advantages and disadvantages.

Incorporating a small business

Incorporation is the act of forming a corporation, a separate legal entity whose rights and liabilities are distinct from its shareholders.

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