Anyone can get together with friends or adult family members and start a company. Commonly, you will issue either voting shares or non-voting shares. Some companies may have different classes of shares with different rights including who is to receive assets if the company dissolves or promising to pay a certain amount of profit to a certain preference shares prior to other shareholders receiving any profits. Typically, when Integra Law incorporates a company, we create a complex share structure to allow for future reorganizing.
Common voting shares are the most common for friends or business partners who are all contributing money, assets, or time and want to all have a say in their investment.
Some business owners will also issue non-voting shares or preferential shares to employees or family members if they choose to share some of the company profit, but do not wish to share control of the company.
Preferential shares entitle their holders to the first share of profit, generally at a fixed rate of return. Most companies will issue a small number of shares at a cent or a dollar each to start.
There are special rules (securities regulations) if you wish to sell shares to anyone who are not existing friends or family, and directors need to approve all share sales in private corporations. Business owners have to be very careful before selling shares to family or friends. With the exception of allowing certain high worth individuals to buy shares (as you see on popular shows such as the Dragon’s Den or Shark Tank), most companies will have to follow a rigid rules such as filing a prospectus prior to seeking any investment from the public. There are also special rules to allow crowdfunding to small investors.