Florida corporation stock issuance works in a fixed order: your articles of incorporation authorize a number of shares, the board approves each issuance by resolution, the corporation receives payment, and you record the shares in a stock ledger. Don’t skip securities law. Every issuance, even to co-founders, has to be registered or fit an exemption.
Here’s how each step works.
What’s the difference between authorized and issued shares?
Authorized shares are the most your corporation is allowed to issue. The number is set in your articles of incorporation. Issued shares are the ones you’ve actually given to shareholders in exchange for cash, property or services.
If your articles authorize 10,000 shares and you’ve issued 5,000 to founders and investors, you have 10,000 authorized shares, 5,000 issued and outstanding, and 5,000 unissued shares left for later.
You can’t issue more than you’ve authorized without amending your articles, which takes shareholder approval and a filing fee. Shares issued beyond the authorized amount are invalid: they don’t give the holder ownership rights, and the corporation may face liability. Check what’s left before every issuance.
How do you authorize shares in your articles?
Under Florida Statutes Section 607.0601, your articles have to state:
- The total number of shares the corporation can issue
- The classes of shares, if you’ll have more than one
- The par value of each class, or a statement that shares have no par value
- The rights and preferences of each class, if there are several
On the articles you file with the Florida Department of State, authorized shares go in Article 4. A simple version:
“The total number of shares the corporation is authorized to issue is 10,000 shares of common stock with a par value of $0.01 per share.”
With two classes:
“The total number of shares the corporation is authorized to issue is 20,000 shares, consisting of 15,000 shares of common stock with no par value and 5,000 shares of preferred stock with no par value.”
Some states charge filing fees based on authorized shares. Florida doesn’t, so there’s no cost to leaving yourself room. Most small corporations authorize between 10,000 and 10,000,000 shares. A common approach is to authorize 10 million and initially issue 5-8 million to the founders, reserving the rest for future employees and investors.
Common stock or preferred stock?
Common stock is basic ownership. Holders usually get one vote per share, dividends when the board declares them, and a share of what’s left on dissolution after creditors and preferred shareholders are paid. They have preemptive rights only if the articles or bylaws provide them.
Preferred stock comes with priorities over common. These can include dividend preferences, liquidation preferences, the right to convert to common, redemption terms that let the company buy shares back at a set price, and cumulative dividends that build up if unpaid. Preferred holders often have limited or no voting rights. Investors want preferred for the downside protection and priority returns.
Most small Florida corporations issue only common stock because it’s simple and gives all shareholders equal ownership rights. Under Section 607.0601, the rights, preferences and limitations of any class have to be in your articles before you issue a single share of it.
Should your shares have a par value?
Par value is a nominal minimum value per share, commonly $0.01, $0.10 or $1.00. It sets the minimum issue price and creates “stated capital” on the balance sheet. Issue 5,000 shares with a $0.01 par value for $10,000 and your stated capital is $50 (5,000 × $0.01). The other $9,950 is additional paid-in capital.
No-par shares have no minimum. That gives you more freedom on price, simpler accounting, and no risk of issuing shares below par, which can create shareholder liability. Section 607.0621 allows shares without par value unless the articles require otherwise.
Go with no par value unless an investor specifically wants par. Most modern Florida corporations do.
How does Florida corporation stock issuance work, step by step?
- Pass a board resolution. The board approves each issuance and the resolution states the number and class of shares, who gets them, what the corporation receives in return, and any restrictions. Put it in the minutes.
- Collect the consideration. Florida Statutes Section 607.0621 requires shares to be fully paid before they’re issued.
- Issue certificates or a book entry. A paper certificate shows the shareholder’s name, number of shares, class and certificate number, and authorized officers sign it. Uncertificated shares exist only as an entry in the stock ledger. Section 607.0625 allows both, and they’re equally valid. Book entry is increasingly common and reduces paperwork.
- Update the stock ledger. Record each shareholder’s name and address, number and class of shares, certificate number if any, issue date and consideration received.
What can shareholders pay with?
Under Section 607.0621, shares can be issued for:
- Cash or cash equivalents, such as checks and wire transfers
- Property, including real estate, equipment and intellectual property
- Services already performed for the corporation
- Promissory notes, with some restrictions
The board decides whether the consideration is adequate, and its good-faith decision is generally conclusive. Many founders get their shares for services, intellectual property or equipment they contribute.
Florida law prohibits issuing shares for services to be performed in the future, with some exceptions. If shares have a par value, you generally can’t accept a promissory note as the only payment.
When property or services are the payment, the board has to set a fair value in good faith. For a significant deal, get an independent appraisal so the number holds up later.
Do you need to worry about securities law?
Yes. Every stock issuance is a securities transaction, and it has to be registered or fit an exemption. Most small corporations use an exemption.
Federal exemptions
| Exemption | What it allows |
|---|---|
| Rule 504 | Offerings up to $10 million in a 12-month period, minimal disclosure |
| Rule 506(b) | Unlimited amount from accredited investors plus up to 35 sophisticated non-accredited investors, no general solicitation |
| Rule 506(c) | Unlimited amount from verified accredited investors, general solicitation allowed |
| Section 4(a)(2) | Private offerings without public solicitation |
If you use a Rule 506 exemption, file Form D with the SEC within 15 days after the first sale. Florida also requires Form D to be filed with the Office of Financial Regulation when you sell to Florida residents.
Florida exemptions
Florida’s securities law is Chapter 517 of the Florida Statutes. Common exemptions are the limited offering exemption (Rule 69W-502.003) for offers and sales to 35 or fewer Florida residents in a 12-month period, the isolated transactions exemption for occasional sales that aren’t part of a pattern, and an exemption for sales made only to accredited investors.
Consider talking to a securities attorney before taking money from anyone outside the founding group, issuing to more than a handful of people, advertising the offering in any way, selling across state lines, or any time you aren’t sure which exemption applies.
What stock records does Florida require?
Under Florida Statutes Section 607.1601, every Florida corporation must keep a stock ledger (shareholders’ names, addresses and holdings), a record of issued shares with dates and consideration, and minutes of board and shareholder actions on stock.
Keep the ledger at the principal office or at your transfer agent’s office. Shareholders can inspect it in certain circumstances. Paper ledger books, spreadsheets, record-keeping software and records kept by your attorney or CPA all work. What matters is that it’s accurate and updated with every transaction. Larger corporations sometimes hire a transfer agent to keep records, process transfers and issue certificates, but small corporations don’t need one.
Review the ledger and shareholder list once a year. It’s much easier to fix a mistake then than in the middle of a sale or fundraise.
How does dilution work, and what are preemptive rights?
Issuing new shares shrinks everyone else’s percentage. If you own 1,000 of 2,000 shares, you have 50%. When the corporation issues 2,000 more to new investors, you still own 1,000 shares, but now that’s 25%.
Preemptive rights let existing shareholders buy new shares before outsiders, so they can keep their percentage. Florida doesn’t grant them automatically. Under Section 607.0630, shareholders have preemptive rights only if the articles explicitly grant them, or if the articles were filed before January 1, 1990 and don’t explicitly deny them.
To add them, put a provision like this in your articles:
“Shareholders shall have preemptive rights to purchase their pro-rata share of any new issuance of shares of the same class before such shares are offered to non-shareholders.”
You can carve out issuances such as shares for employee compensation or acquisitions. Shareholders can also waive their rights for a particular issuance in writing, and nobody is required to use them.
Should founder shares vest?
If there’s more than one founder, yes. Restricted stock comes with conditions, and the most common is vesting: the holder earns the shares over time. Typical schedules are four years with a one-year cliff (25% after the first year, then monthly or quarterly) or three-year graded vesting (33.33% a year). Vesting can also depend on hitting milestones.
The corporation usually keeps the right to buy back unvested shares if the holder leaves early. Without that, a co-founder who quits after six months walks away with a large stake.
Document the restrictions in a restricted stock agreement, a legend on the stock certificate, and, for transfer restrictions that apply to everyone, the articles or bylaws. Transfer restrictions usually require shares to be offered to the company or other shareholders before an outside sale.
Don’t miss the 83(b) election. Someone who receives restricted stock that vests over time can file an IRS Section 83(b) election within 30 days of issuance. It lets them be taxed on the current value, which is usually low, rather than the value at vesting. That can save a lot of tax if the company grows. It’s irrevocable and the deadline is strict.
A few habits that prevent problems
Issue shares promptly after formation. Unclear ownership causes trouble for governance and fundraising. Write a board resolution for every issuance. Support non-cash valuations with financial data or appraisals. Add a right of first refusal or buy-sell provisions so you control who becomes a shareholder. And keep the records where you can find them quickly for due diligence, audits or shareholder requests.
Frequently asked questions
Do I have to issue all my authorized shares?
No. Most corporations issue only part of them at first and keep the rest for employees, investors or other purposes. There’s no required minimum.
What’s the difference between issued and outstanding shares?
Issued shares are every share the corporation has ever issued. Outstanding shares are the ones shareholders hold now, which excludes treasury stock the corporation bought back. In most small corporations the two numbers are the same.
Do I need paper stock certificates?
No. Florida allows uncertificated shares recorded only in the ledger. If you do issue certificates, keep matching ledger entries.
How do I increase authorized shares?
Amend your articles. The board proposes the amendment, shareholders approve it (usually by majority or supermajority), and you file articles of amendment with the Florida Department of State and pay the filing fee ($35 for online filing).
Are there ongoing fees for holding shares in Florida?
No. Florida corporations pay an annual report fee ($150, due by May 1st each year), and it doesn’t change with the number of shares. There are no other taxes or fees for holding shares.
Can a Florida corporation issue shares to non-US residents?
Yes. Think about securities rules for international offerings, tax withholding for non-resident shareholders, and limits on foreign ownership in certain regulated industries.
Can one person own the whole corporation?
Yes. Florida has no minimum number of shareholders. One person can be the sole shareholder, director and officer.
How do I transfer shares to a new owner?
The current owner signs an endorsement or transfer document, you confirm the transfer complies with any restrictions in the articles, bylaws or shareholder agreement, you update the ledger, and you issue a new certificate or book entry.
What records should I keep for taxes?
The stock ledger with every issuance and transfer, the board resolutions approving issuances, proof of what was received (receipts, property valuations, service agreements), any 83(b) elections, and restricted stock agreements or vesting schedules.
Do I need a lawyer to issue stock?
Not for a simple initial issuance to founders, which many corporations handle with templates. Get counsel for outside investors, non-cash consideration, complex vesting, capital raises, or any securities question you aren’t sure about.
If you’re issuing founder shares now, do it promptly after formation: one resolution, one ledger entry per founder, and 83(b) elections filed within 30 days for anyone on a vesting schedule. For complex issuances or securities offerings, talk to a Florida business attorney or securities lawyer.