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Business Formation, Share Expression, Numbers

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?

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Attorney answers 3

Posted

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 analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here.

Posted

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 lawyers.....you 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 licensed attorney in your State should be obtained.

Michael Charles Doland

Michael Charles Doland

Posted

Thank you.

Posted

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.

Bryant Keith Martin

Bryant Keith Martin

Posted

You can issue 100 shares to each shareholder which gives you the exact equal one third ratios that you want

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