Board Resolution - Issue Shares

BOARD RESOLUTION -- AUTHORIZATION TO ISSUE SHARES

OVERVIEW AND PURPOSE

This Board Resolution authorizes the corporation to issue shares of its capital stock. Under the laws of most states, the board of directors has the authority to issue shares up to the number authorized in the certificate of incorporation. The board must determine the adequacy of consideration for the shares and ensure compliance with applicable securities laws.

When This Resolution Is Needed:

• Initial issuance of shares to founders upon formation
• Issuance of shares to new investors (angel, venture capital, or other financing rounds)
• Issuance of shares to employees, consultants, or advisors as compensation
• Exercise of stock options or warrants
• Conversion of convertible notes or other convertible securities
• Stock splits or stock dividends
• Issuance of shares in connection with mergers or acquisitions

Legal Effect:

• Formally authorizes the issuance of shares and the terms thereof
• Establishes the consideration received as adequate (board determination is conclusive under many state laws)
• Creates a governance record of board authorization required for proper issuance
• Confirms compliance with applicable exemptions from securities registration

Who Must Authorize:

• Board of Directors (majority of quorum, unless bylaws require a greater vote)
• Shareholder approval may be required if: (i) new authorized shares must be created by charter amendment; (ii) preemptive rights exist; or (iii) stock exchange rules require it

RESOLUTION DOCUMENT

UNANIMOUS WRITTEN CONSENT OF THE BOARD OF DIRECTORS

OF [________________________________]

(the "Corporation")

IN LIEU OF A SPECIAL MEETING

The undersigned, being all of the members of the Board of Directors of [________________________________], a [________________________________] corporation (the "Corporation"), pursuant to the provisions of [________________________________] (applicable state statute permitting action by written consent), hereby consent to the adoption of the following resolutions, which shall have the same force and effect as if adopted at a duly convened meeting of the Board of Directors at which a quorum was present and acting:

RECITALS

WHEREAS, the Corporation is a [________________________________] corporation duly organized, validly existing, and in good standing under the laws of the State of [________________________________]; and

WHEREAS, the Corporation's Certificate of Incorporation authorizes the issuance of the following capital stock:

WHEREAS, the Board of Directors has determined that it is in the best interests of the Corporation to issue additional shares of its capital stock as described below; and

WHEREAS, the Board of Directors has considered the adequacy of the consideration to be received for the shares and has determined that such consideration is adequate; and

WHEREAS, the Board of Directors has confirmed that the issuance of shares as described herein does not exceed the number of authorized shares set forth in the Corporation's Certificate of Incorporation and that sufficient authorized but unissued shares are available; and

WHEREAS, the Board of Directors has confirmed that the proposed issuance does not violate any preemptive rights of existing shareholders, or that any applicable preemptive rights have been waived or satisfied; and

WHEREAS, the Corporation has determined that the issuance of shares qualifies for an exemption from registration under the Securities Act of 1933, as amended (the "Securities Act"), and applicable state securities laws;

RESOLVED CLAUSES

Part A: Authorization to Issue Shares

NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby authorizes the issuance of shares of the Corporation's capital stock as follows:

Issuance Details

Recipients of Shares

Part B: Adequacy of Consideration

RESOLVED FURTHER, that the Board of Directors hereby determines that the consideration to be received by the Corporation for the issuance of shares described above is adequate, and that such shares, when issued and delivered in accordance with this resolution against receipt of the stated consideration, shall be validly issued, fully paid, and nonassessable;

RESOLVED FURTHER, that the Board has considered the following in making its determination of adequacy of consideration:

☐ Fair market value of the Corporation based on: [________________________________]
☐ Recent arms-length transactions involving the Corporation's shares
☐ Independent valuation or appraisal dated [__/__/____]
☐ Book value of the Corporation's assets
☐ Revenue, earnings, and financial projections
☐ Comparable company analysis
☐ Value of property or services to be received
☐ Other: [________________________________]

Part C: Consideration

RESOLVED FURTHER, that the consideration for the shares shall consist of the following:

☐ Cash: $[________________________________], to be paid by wire transfer, check, or other immediately available funds on or before [__/__/____]

☐ Tangible or Intangible Property: [________________________________] (describe property), having a fair market value of $[________________________________] as determined by [________________________________]

☐ Services Rendered: [________________________________] (describe services), having a fair market value of $[________________________________]

☐ Promissory Note: A promissory note in the principal amount of $[________________________________], bearing interest at [________________________________]% per annum, payable on or before [__/__/____], secured by: [________________________________]

• Note: Some states (including Delaware under DGCL Section 152) permit promissory notes as consideration; other states (including those following MBCA Section 6.21(b)) prohibit promissory notes and future services as consideration for shares

☐ Conversion of Debt: Conversion of outstanding indebtedness in the amount of $[________________________________] owed by the Corporation to [________________________________] pursuant to [________________________________] (describe convertible instrument)

☐ Other: [________________________________]

Part D: Securities Law Compliance

RESOLVED FURTHER, that the issuance of shares is intended to be exempt from registration under the Securities Act of 1933, as amended, and applicable state securities laws, pursuant to the following exemption(s):

☐ Section 4(a)(2) of the Securities Act (private placement to accredited and/or sophisticated investors)
☐ Rule 506(b) of Regulation D (private placement, no general solicitation, up to 35 non-accredited investors)
☐ Rule 506(c) of Regulation D (private placement with general solicitation, all purchasers must be accredited investors with verification)
☐ Rule 504 of Regulation D (offerings up to $10 million in a 12-month period)
☐ Rule 701 under the Securities Act (compensatory issuances under written plans)
☐ Regulation A (Tier 1: up to $20 million; Tier 2: up to $75 million)
☐ Regulation Crowdfunding (up to $5 million in a 12-month period)
☐ Intrastate offering exemption (Section 3(a)(11) / Rule 147 or 147A)
☐ State-specific exemption: [________________________________]

RESOLVED FURTHER, that in connection with the issuance of shares, the officers of the Corporation are authorized and directed to:

(a) Prepare and deliver to each purchaser/recipient a Stock Subscription Agreement, Stock Purchase Agreement, or other appropriate documentation;

(b) Obtain from each purchaser/recipient an investment representation letter, including representations regarding accredited investor status (if applicable), investment intent, and acknowledgment of transfer restrictions;

(c) File a Form D with the Securities and Exchange Commission within 15 days after the first sale of securities, if required under Regulation D;

(d) File any required notices or filings under applicable state securities laws (blue sky laws);

(e) Affix restrictive legends to all stock certificates (or electronic book entries) substantially in the following form:

"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS. THESE SHARES MAY NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED, OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS."

Part E: Stock Certificates and Records

RESOLVED FURTHER, that the officers of the Corporation are hereby authorized and directed to:

(a) Issue stock certificates (or make book entry notations, if the Corporation has adopted uncertificated shares) representing the shares authorized herein, upon receipt of the applicable consideration;

(b) Update the Corporation's stock ledger and transfer books to reflect the issuance;

(c) File any required reports or amendments with the state of incorporation (e.g., if a new series of preferred stock is being created);

(d) Obtain a taxpayer identification number from each purchaser/recipient;

(e) Issue IRS Form 1099 or other tax reporting documents as required;

Part F: Vesting Schedule (If Applicable)

☐ The shares issued to the following individuals are subject to vesting:

RESOLVED FURTHER, that recipients of shares subject to vesting shall be required to execute the Corporation's standard Restricted Stock Purchase Agreement, which shall include the Corporation's right to repurchase unvested shares upon termination of service at the original purchase price (or such other terms as determined by the Board);

Part G: General Authorization

RESOLVED FURTHER, that the officers of the Corporation are hereby authorized and empowered to execute and deliver any and all documents, instruments, agreements, certificates, and filings as may be necessary or appropriate to carry out the intent and purposes of the foregoing resolutions, including but not limited to stock purchase agreements, subscription agreements, investment representation letters, and regulatory filings;

RESOLVED FURTHER, that all actions heretofore taken by any officer or agent of the Corporation in connection with the issuance of shares described herein are hereby ratified, confirmed, and approved in all respects.

MULTI-STATE COMPARISON TABLE

PRACTICE NOTES FOR ATTORNEYS

Pre-Issuance Checklist

☐ Confirm authorized shares available (check certificate of incorporation)
☐ Verify no preemptive rights exist, or that they have been waived or satisfied
☐ Determine fair market value of shares (409A valuation for compensatory issuances)
☐ Identify applicable securities law exemption(s)
☐ Prepare stock purchase agreement or subscription agreement
☐ Prepare investment representation letter
☐ Review and update stockholders' agreement, if any (right of first refusal, co-sale, voting)
☐ Review any existing agreements for anti-dilution protections triggered by issuance
☐ Prepare stock certificate or book-entry confirmation with restrictive legend
☐ Prepare and file Form D with SEC (if Regulation D offering)
☐ File state blue sky notices as required
☐ Update stock ledger
☐ Update capitalization table
☐ Obtain 83(b) election forms for recipients of restricted stock (must be filed within 30 days)

Key Drafting Considerations

1. 409A Valuation: For compensatory stock issuances, IRC Section 409A requires that stock options and other equity compensation be granted at no less than fair market value. While the IRC Section 409A rules do not technically apply to outright grants of restricted stock, a current valuation supports the purchase price and reduces tax risk. Obtain a 409A valuation from a qualified appraiser.

2. 83(b) Election: When shares are subject to vesting (a "substantial risk of forfeiture"), the recipient should consider filing an election under IRC Section 83(b) within 30 days of the grant date. This election causes the recipient to recognize ordinary income at the time of grant (based on the excess of fair market value over the purchase price) rather than at the time of vesting.

3. Preemptive Rights: New York is notably different from most states in providing default preemptive rights under BCL Section 622, meaning existing shareholders have the right to purchase their proportionate share of newly issued stock unless the certificate of incorporation opts out. Delaware and most other states provide preemptive rights only if the certificate affirmatively grants them.

4. Consideration Type: California is notably restrictive on permissible consideration, prohibiting promissory notes and future services as consideration for shares under Corporations Code Section 409(a). Delaware is more permissive under DGCL Section 152.

5. Restrictive Legends: All certificates (or book entries) for shares issued in a private placement must bear appropriate restrictive legends. The legend should reference both the Securities Act and applicable state securities laws.

6. Stockholders' Agreement: If the Corporation has a stockholders' agreement, investors' rights agreement, or right of first refusal and co-sale agreement, review these documents for consent requirements, anti-dilution protections, and information rights triggered by the new issuance.

7. Regulation D Filing: If relying on Regulation D, Form D must be filed with the SEC within 15 days after the first sale of securities. Late filing does not invalidate the exemption but may have consequences in some states.

8. State Blue Sky Laws: Each state has its own securities laws. Even if a federal exemption applies, most states require a notice filing and fee. Verify blue sky requirements in every state where purchasers reside.

Common Pitfalls

• Issuing more shares than authorized in the certificate of incorporation (void issuance)
• Failing to check for and satisfy preemptive rights (especially in New York)
• Accepting prohibited forms of consideration (e.g., promissory notes in California)
• Failing to file Form D or state blue sky notices
• Missing the 30-day deadline for IRC Section 83(b) elections
• Not obtaining proper accredited investor verification for Rule 506(c) offerings
• Failing to update the stock ledger and capitalization table

SIGNATURE AND CERTIFICATION BLOCK

This Unanimous Written Consent is effective as of [__/__/____].

DIRECTORS:

Name: [________________________________]
Signature: ______________________________
Date: [__/__/____]

Name: [________________________________]
Signature: ______________________________
Date: [__/__/____]

Name: [________________________________]
Signature: ______________________________
Date: [__/__/____]

Name: [________________________________]
Signature: ______________________________
Date: [__/__/____]

Name: [________________________________]
Signature: ______________________________
Date: [__/__/____]

SECRETARY'S CERTIFICATE OF RESOLUTION

I, [________________________________], the duly elected and acting Secretary of [________________________________] (the "Corporation"), a [________________________________] corporation, hereby certify that:

1. I am the Secretary of the Corporation and am authorized to execute this Certificate.

2. The foregoing resolutions were duly adopted by the unanimous written consent of the Board of Directors of the Corporation, effective as of [__/__/____], in accordance with the provisions of [________________________________] (applicable state statute) and the Corporation's Bylaws.

3. The resolutions have not been amended, modified, or revoked and remain in full force and effect as of the date of this Certificate.

4. The Corporation is duly organized, validly existing, and in good standing under the laws of the State of [________________________________].

5. The Corporation's Certificate of Incorporation authorizes the issuance of [________________________________] shares of [________________________________] stock, of which [________________________________] shares are currently issued and outstanding.

6. The issuance of [________________________________] additional shares as authorized by the foregoing resolutions will not cause the total number of issued and outstanding shares to exceed the number of authorized shares.

7. The Corporation's Certificate of Incorporation and Bylaws do not contain any preemptive rights provisions applicable to the shares being issued, except: [________________________________] (describe any preemptive rights, or state "None -- preemptive rights have been waived/do not exist").

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the corporate seal of the Corporation as of [__/__/____].

______________________________
[________________________________]
Secretary

[CORPORATE SEAL]

SOURCES AND REFERENCES

• Delaware General Corporation Law, Title 8, Del. Code (DGCL)
• § 141(a), (f): Board authority and action by written consent
• § 152: Issuance of stock; lawful consideration
• § 153: Consideration for stock
• § 157: Rights and options respecting stock
• § 166: Formalities required of stock subscriptions
• § 102(b)(3): Preemptive rights
• Model Business Corporation Act (MBCA)
• § 6.21: Issuance of shares
• § 6.22: Liability of shareholders
• § 6.30: Shareholders' preemptive rights
• § 8.01: Board of directors requirement and functions
• Securities Act of 1933, § 4(a)(2), § 3(a)(11)
• SEC Regulation D, 17 CFR § 230.504, § 230.506
• SEC Rule 701, 17 CFR § 230.701
• IRC § 83(b) (Election to include in gross income in year of transfer)
• IRC § 409A (Nonqualified deferred compensation plans)
• California Corporations Code § 400, § 406, § 409; CA Corp. Code § 25102
• New York Business Corporation Law § 501, § 504, § 622
• Texas Business Organizations Code § 21.151-21.160, § 21.208
• Florida Statutes § 607.0601, § 607.0621, § 607.0630

This template is provided by ezel.ai for informational purposes only. It does not constitute legal advice and should not be used as a substitute for consultation with a qualified attorney.