llc in delaware, And Other Considerations For a Stock Corporation

2007-03-08 10:33:40

( Business )



If you choose a stock corporation when you incorporate in delaware, some of the important features with regard to stocks and assets are:

Limited Liability
The llc in delaware is one of the most popular corporate forms and has two principal attributes
- Ownership and management in an llc in delaware are separated.
- Liability of stockholders is limited. This means that in the llc in delaware the stockholder:
• Isn’t personally liable for corporate debt
• Only risks the personal investment (this is a very important concept when finding investment capital).

Capital structure
- Once you incorporate in delaware, Delaware State doesn’t have a minimum capital requirement. You can establish your capital structure in the way that best suits you.
- incorporate delaware and you can issue single or multiple classes of your stock, according to your certificate of incorporation.
- In the case of a public corporation, sufficient stock should be authorized so that the needs of the initial offering are met as well as enough extra shares for any future needs (like acquisitions, stock bonuses, employee stock options etc.)
- When a corporation is allowed to issue numerous classes of stock. The board of directors may have broad powers to decide the:
• preferences and rights
• powers
• limitations and restrictions
• qualifications, of any of the classes of stock.
- Stock can be voting or not. Shares of a particular class can be given more or less votes than shares of some other class.
- Stock can be:
• Common (the last to be sold in liquidations)
• Preferred (first with regard to dividends or liquidation)

The dividends may be fixed or may fluctuate.

Powers
The corporation law in Delaware gives the corporation the power to:
- guarantee debts
- borrow money
- issue bonds
- Otherwise incur debt.



Dividends
- Common stock dividends are payable if, as and when decided by the board of directors (unless there is a restriction in the certificate of incorporation).
- On preferred stock the dividends are also discretionary (unless they are otherwise fixed by the certificate of incorporation).
- The corporation may pay dividends out of its net assets aside from its capital. In the case that these funds aren’t available, the dividends should be paid from the net profits in the declared or preceding fiscal year – subject to certain conditions.

Although stockholders don’t need to approve of proposed dividends, this can be imposed in the certificate of incorporation.


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