Does Virginia Exempt Sales Of Shares By Small Corporations From Securities Registration Requirements?
In forming small corporations, you must have the idea that you need to declare the authorized shares of your corporations. You should also put in mind that these authorized shares are a determinant of your annual registration fee and charter fee.
The state of Virginia, through its government, regulates the sales and offers of shares of stock. This means that your financial obligation to the government depends on the classes of shares and the number of shares in each class.
However, the government has certain exemptions for small corporations. Once exempted, your corporation does not need to pay the annual fee.
Know more about this by speaking with a dependable business formation lawyer. If you are in Manassas, Virginia, you can visit The Irving Law Firm and begin your legal counseling about your corporation. They can help you avoid paying unnecessary annual fees after ensuring your exemption from securities laws.
Sales & Offers Of Shares
Virginia and it’s federal securities laws refer to shares and offers of stocks as “securities”. This means that you have to pay your financial obligations when your declaration of shares goes beyond the exemptions under the Virginia code.
The provisions under Article 13.1-514 (B) of the Virginia code exempt small corporations from paying annual fees if:
- Your corporation issues shares to not more than 35 security holders.
- The corporation has paid the filing fee for the exemption of not more than $250.
- The sales of an issue of bonds total $150,000 or less to 30 or fewer Virginia residents.
It is therefore important that you declare the actual number of shares to avoid legal repercussions once discovered to have violated the exemption rule. Even when there is a merger, the exemption remains the same with shares issued to not more than 35 security holders.
A legal counsel can help you prepare your documents for business formation. They can also classify your business and identify whether or not you are eligible for the exemption.
Forming Small Corporations
The filing of articles for incorporation at the Virginia Corporation Commission requires you to declare the following important information:
- Corporate information.
- Stock.
- Registered Office and Agent.
- Initial Directors.
- Incorporators.
The declaration of stocks is fundamental in the assessment of the Commission on your incorporation. You should take note that your financial obligations to the state do not only end after the registration and the annual tax payments.
You also have to pay for your annual registration fee and charter fee.
This is a policy under the Virginia code to monitor the size and scale of business activities that your corporation engages with.
Annual Fees Upon Registration
For instance, you may be exempted from the annual fees upon registration if your declaration of shares belongs to the exemption rule. However, it can grow beyond the numbers in the rule as your business grows.
The filing of your shares to pay for the annual fees will then help the Commission assess the activity of your business. Their concern is that your business must be operating in accordance with the law.
Upon registration, the number of each class of stock that the corporation is authorized to issue must be present in the articles of incorporation. You do not want to engage in fraudulent activity and suffer legal repercussions for your company. Therefore, each class of shares and the number of security holders must be honestly declared in the articles of incorporation.
Summary
The declaration of sales and offers of shares is the determinant of the corporation’s annual registration and charter fee. There are exemptions, especially for small corporations operating with only less than 35 security holders.
If your corporation operates under this condition, you must be aware that you do not have to pay the fees. Moreover, there is also an exemption from the fees if the total sales of shares only amounted to not more than $150, 000.
These sales must only be offered to 30 or fewer Virginia residents. These provisions are important for you to know to avoid high-costing annual fees and possible legal repercussions.
Discuss your business with an experienced business formation lawyer so you can assure that your operations are legally sound. If you are still not sure about the eligibility of your business to certain exemptions, you can connect with the lawyers at The Irving Law in Manassas, Virginia.
They do not only offer services related to a fee exemption. They can also help you from the very start of processing your business formation up to the actual business operations.
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