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I made a mistake issuing share certificates to the wrong entity. How do I fix it?

New York, NY |

I am the sole shareholder of a corporation. When I established the company, I had the share certificates made out to myself, and did a board resolution authorizing the issuance of the shares to me.

I'm now realizing that I probably should have had the shares issued to my LLC instead (in which I'm the only member). Can I just write a board resolution saying that the shares were issued to me in error, and that they'll be canceled and new ones issued to my LLC instead?

Attorney Answers 1

Posted

No...better way is to simply issue a new certificate in the name of the LLC necessitated by you (personally) making a capital contribution of your stock to the LLC (this is a tax-free step). This would be reflected as a Member Consent Resolution reflecting this second step of the process and you can then void/cancel the original certificate of the corporation and put it in your corporate kit with a new entry in the stock ledger showing the change of ownership. Also put a copy of the LLC Member Consent Resolution in the corporate file as well as the evidence supporting what you did.

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.

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Asker

Posted

Thank you Mr. Corrigan---that's very helpful. To be clear, my LLC (via the member consent resolution) must consent to my personal contribution of the shares to the LLC?

John P Corrigan

John P Corrigan

Posted

Not at all....you are the 100% owner of the LLC so your word rules....LLC cannot seek your permission because you are the permission so to speak.

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