I want to give shares in my rapidly growing start-up to my niece and nephew, so when we go public, they can pay for college.
What is the best way to go about doing this? Issuing common stock?
I am sure that your corporate lawyer can help you draft the papers to effectuate the transfer of shares
There are at least two different ways to accomplish your goal, but they are subject to restrictions imposed by the organizational documents and agreements of your company as well as by applicable securities laws. One way is for you to transfer some of your shares to your niece and nephew, which has gift tax implications as well as the aforementioned restrictions. The second way is for the company to issue the shares to the nephew and niece, which will require corporate action as well as consideration of the aforementioned restrictions. You should consult with an experienced Corporate or Securities Attorney to assess the best option for your situation.
The foregoing discussion does not establish an attorney-client relationship, is qualified by the limited facts presented above, and should not be relied upon as legal advice. To obtain definitive legal advice upon which one can rely necessitates retaining an attorney who is qualified in this particular area of the law.
You can gift stock to them personally, or have the corporation issue shares. Talk with a corporate/tax attorney to get a sense of what is the better option.
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