How to issue corporate stock as a small family business

September 7, 2025

By Nadia Cabrera-Mazzeo, Esq.

Short Answer: You can issue stock by writing a resolution, having the board of directors vote on it, and keeping good records of the process of transferring stock.

Does my small family businesses have to issue corporate stock?

Yes. If your business is a corporation (not an LLC), then you are legally required to issue your company’s stock. Your company’s stock, or shares, are essentially units of ownership. A stockholder or shareholder is an owner of a corporation. We are used to hearing these terms in the world of huge corporations like Apple and Microsoft which are publicly traded so anyone can technically buy stock on the stock exchange and become part owner of that company.

But technical legal business concepts can get muddled at the small business level, especially when a corporation is owned by one person or a handful of close friends or family members. In these situations, small business owners often forget to officially issue their company’s stock.

Step 1: Write a resolution.

The resolution can say something like this on your company’s letterhead:

RESOLVED: The company shall issue XXX Shares of its stock to (NAME) for the price of $XX per share or services valued at $XX.

This is the resolution language at its most simple. You can have multiple stock transactions in one resolution, just write that sentence for each person getting the stock. You don’t have to use this exact language either, you can write it yourself but make sure it’s clear how many shares you’re giving which person and what, if anything, they’re giving the corporation in return. You must follow the correct procedures to vote on and pass resolutions.

Step 2: Call a meeting of the Board of Directors.

Check your company’s bylaws to see how much notice you have to give the directors and if there are any other requirements to officially call a board meeting.

What if I’m the only director? If it’s just you, then sit down and have the meeting by yourself at a time that works for you. It may sound silly, but following proper procedures like this helps to ensure that you’re running a legitimate business with a strong liability shield.

Step 3: Take a vote and approve the resolution to issue stock.

Remember to jot down the meeting minutes (general notes about what actions were taken at the meeting, when the meeting happened, and who was there) and keep those minutes in a safe place. The minutes are important business records that also indicate you’re running a legitimate business with strong liability protection.

Step 4: Transfer the stock to the new owner.

The best way to hand over stock to someone is by filling out a stock certificate and giving that certificate to the new owner. You can easily google “stock certificate” and use a template, just make sure to put that the company is incorporated in New Mexico. Certificates give the transaction an official feel and provide a physical or digital token of ownership.

Step 5: Make a note of the stock transfer in a spreadsheet or other tracking document.

Make sure you’re keeping organized business records in general. Among those records should be a spreadsheet or something similar to track where your company’s stock is at any given time– who has it? How much does each person have? When did the transfers take place? Etc.

How do I know how many shares my company has to issue?

Although corporate stock is intangible and, frankly, made-up, there is a limit to how much stock, or how many shares, you can issue. A corporation can only issue “authorized shares.” When your corporation was first registered with the state, you had to authorize a certain number of shares. That number will be in your articles of incorporation. Most small businesses authorize between 1,000 and 10,000 shares. You can increase the number of authorized shares later by amending the articles of incorporation.

Do I have to issue all of the authorized shares?

No. In fact, it’s recommended to issue only a portion of authorized shares to give you more flexibility down the line. But you have to issue at least one share. This often happens when the business is registered, but I have found that with some small family businesses, either it never happened or they’ve lost any record of the transaction. Shares that have been issued should be reflected in the spreadsheet or tracking document we talked about earlier.

How do I decide how many shares to give out?

The number of shares an owner has will equal their percentage of ownership in the company. Most small business owners have a good idea about how ownership of their company is going to be divided. For example, 3 siblings go into business together and want to own their corporation equally. Of the 1,000 authorized shares, they each get 100. The 700 unissued shares are left “reserved” to be used later, if at all, or some other internal purpose.

Do the math carefully to make sure the shares you issue to each person accurately reflect the ownership stake you want each person to have.

What happens if I don’t issue my company’s stock?

In the context of small, closely-held businesses, failing to issue stock may not have immediate consequences. However, it can become a real problem if a creditor is suing your business and trying to dip into your personal pocket to satisfy the business debts (this is called “piercing the corporate veil”). Issuing stock is a legal requirement for corporations. If you didn’t issue stock AND you have blurry boundaries with your business like using business funds for personal expenses, then the chances are higher that a judge will pierce through your business’s liability shield and hold you personally responsible for the business’s debt.

Are there different types of stock?

Yes, but if your corporation is an S corporation, which is most common for small businesses, then you are legally only allowed to have one class of stock (called “common stock”). This means that every shareholder (owner of the company) has equal rights when it comes to distributions and liquidation proceeds if the business has to sell off its assets.

While the economic rights attached to company stock have to be the same for all shareholders in an S corporation, S corps are allowed to give different shareholders different voting rights. In technical terms, this means issuing two different types of common stock: voting and nonvoting.

Law office of Nadia Cabrera-Mazzeo, Esq.

Small business and contracts lawyer

Based in Taos, serving clients throughout New Mexico

505 427 2025

nadia@honestcontracts.com

The information on this website is not legal advice and does not create an attorney-client relationship. The rates and fees listed on this website may not be the most up to date.