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Revision as of 14:56, 21 August 2014 by Mrcoolbp (talk | contribs) (What is Stock)

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One of the major aspects following incorporation is to make sure that the board of directors has sufficient oversight to make sure that the company is successful on a longer term. This has become a bit of a point of contention of how we do this.

Matt's Proposal (Issue Stock)

Matt's proposal is to issue stock to the de-facto founder of the business, NCommander and himself, who also are the two folks who have financial stake in the site. In exchange for 5,000 shares each, we would concede all personally owned rights to SoylentNews and reassign them to the corporation, and then take the form as "watchdogs" to make sure that the corporation doesn't loose sight of itself.

In traditional corporations, it is normally the duty of the stockholders to ensure that the board of directors is acting in a responsible manner. Unfortunately, issuing stock creates complications that perhaps muddle the waters further due to the relationship between stock holders and the board of directors.

What is Stock

Stock, simply put, is ownership in a company; the more stock you own, the larger percentage of the company you own, as well a louder influence with specific actions stockholders can take. Stock has two forms, preferred and common, but for the purposes of this discussion, we are only talking about common stock. Stock is frequently issued to investors, debtors, and other relevant parties in exchange for assets, services and/or time to give them some say in how their investment is managed. Stockholders have the ability to both influence the size of the board of directors, as well forcibly replacing any member of the board at the annual stockholder meetings.

Stock is issued by the board of directors, up to a limit defined by the articles of incorporation. The board can also place limited restrictions on the stock, such as preventing transfer to a third party. Under normal circumstances, the board of directors has a specific duty to maximize the value of stock, though as a B-corporation, we are allowed to take in account our "mission statement", as defined in the articles of incorporation in account.

In theory, stockholders are the "soul" of a company, by making sure the board of directors acts in a way that is aligned with their interests. Voting power at the annual stockholders meetings are directly proportional to the amount of stock held, so if you have one person with 5,000 shares, and another two with 1,000 each, whatever the 5,000 shareholder says will automatically be a majority.