Starting-up a U.S. Corporation: What Are Shareholders Common Shares and Stock?.

The owners of the corporation are its investors, namely the shareholders who can be private investors, institutional investors; insurance & pension companies or others corporations who want to profit in the success of the business or even own enough of a stake to have its own a board member appointed. The way this basically works is that a number of shares are issued by the company; the actual number and type of shares issued is defined in the articles of incorporation where the number of ordinary shares represents the net worth of the business. There are various or classes of stock that can be issued but a company that issues just one type issues Common Stock. It is worth noting that for example Preferred Stock is a type of stock that has no voting rights but this type has more rights to receive dividend payments than common stock. When a share is bought it is accompanied by a share certificate issued by the corporation to the shareholder. This shareholding of common stock represents to the shareholder voting rights that can be exercised at shareholder meetings for making keystone decisions about the running of the enterprise.

Transactions of trading corporate stock is recorded in the 'Corporate Stock Transfer Book', hence the term, 'Book Value'. The 'Book' is used to record stock that has been issued and the transfer of stock certificates; with the exception of the company accounts it has all other corporate records. A shareholder actually has the right to inspect the corporations books although eligibility may have some difficulties and will possibly relate to a shareholder having a minimum number of shares and who must have a reasonable financial need or strategy to be allowed an inspection of the books which are highly confidential to the company.

The Board of Directors have the power to distribute and share profits by allocating dividends on stock. A direct influence of a shareholder on the business is made through voting rights about major decisions such as:election of directors, sale of major corporate assets, liquidation, mergers and business acquisitions. These voting decisions are usually made and are limited to participation at Extraordinary and Annual General Meetings and the shareholders can only exercise their power collectively as a group and not as individuals. A shareholder has no power to influence management decisions or the day-to-day running of the enterprise they can only act collectively at arranged meetings but they can trade their own stock at will without consultation with the corporation.

Shareholders have the right to approve through their vote modifications to the Corporate Articles of Incorporation.

The officers of the corporation, namely: President and Treasurer; give a presentation of their annual reports about the top level keystone activities of the company along with the audited company accounts. In response the shareholders normally vote by secret ballot the election of new directors for the next 12 month term or re-elect directors from the previous term of office for the following year. Other major key decisions are then addressed and the shareholders may be obliged to cast their votes. The meeting resolutions are recorded in the minutes and represent the only shareholder records of decisions made in conjunction with the stock transfer book.

The following documents pertain to Corporate Stock and Shareholders

Stock Certificate Kit, Stock Purchase Agreement, Stock Power/Transfer

Shareholder Resolutions, Pre-Incorporation Kit, Articles of Incorporation

Amendment to Articles of Incorporation