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Richard
Richard, Attorney
Category: Business Law
Satisfied Customers: 55608
Experience:  32 years of experience practicing law and a businessman.
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Can a business owner sell shares for their company at a higher

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Can a business owner sell shares for their company at a higher cost than the initial capital investment ? For example, If I own 2 million shares of my company at $0.01, can I sell 1 million shares for $1.00 in order to assist in financing the company?

Good morning. Yes, you are not restricted by the initial capital investment. The price of the shares you sell now should reflect what the market will pay for them now, not what the initial investment was.

 

 

I hope this has given you the guidance you were seeking. I wish you the best of luck!

 

 

 

The information given here is not legal advice. As all states have different intricacies in their laws, the information given is general only. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.

Customer: replied 7 years ago.
Assuming I do this, and maintain 51% of the shares in the company, does that still mean I have management control of the company? Or would this now be considered dilution? I am essentially trying to fund my business through an equity investment in my corporation... The stocks would be issued to investors, friends, family, etc...



You would be diluting your ownership from 100% to 51%, but as long as you maintain a 51% majority, you will control your company. The more diverse the ownership, the less ownership you need (e.g., in large public companies less than 50% controls), but as long as you don't go below 51% no group of shareholders can form a block of voters to overcome your control.

 

 

I hope this has given you the guidance you were seeking. I wish you the best of luck!

 

 

 

The information given here is not legal advice. As all states have different intricacies in their laws, the information given is general only. This communication does not establish an attorney-client relationship with you. I hope this answer has been helpful to you.

Customer: replied 7 years ago.
OK I think I understand. Just to be certain here is how the math would work out in this scenario:

1. I create 2,000,000 shares in my corporation at $0.01
2. I purchase 1,020,000 of these shares at $0.01 to set a 51% ownership
3. Based on work put into the company I value the shares at $1.00
4. I sell the remaining 980,000 shares at $1.00 to various investors
5. The money invested in the company to date is all available to fund the companies business operations.

Based on this I still would have management control right ?

Note this is not in the exchange - just for equity investment in a startup company.

Thanks for your help
Sorry for the delay....had to drive to Austin. Yes, that is correct...your plan will keep you in control! Good luck!
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