What parameters decides on number of shares to be issued.?



2
when a company goes public and issues shares, who will decide how much shares the company will have and based on what parameters that will be decided.?

3 Answer(s)


1

Some states have limits to how many shares a corporation can have and others have franchise tax rules based on the amount of shares and or the value of each share. But I do believe that for small corporations with one or just a couple of shareholders where there isn't intention on acquiring investment capital a small amount of authorized shares is recommended with a low par value, such as 1500 shares at $1. This amount is low enough not to impose any increased franchise tax.

So,I do believe that a small amount of authorized shares is good with a low par value.

0

Its mostly decided by the Investment Bankers and the Company CFO.

First they will decide the valuation of the company. Lets say $ 1 billion

Then they will pick a number of shares quantity so that price per share is still affordable to most common investors. They will try to keep it under $50 per share.

If there are too few shares then price per share will be $500 and no one can afford to buy those shares.

0

Thank you Binny sir. and thank you Soham

Your Answer

Click on this code-snippet-icon icon to add code snippet.

Upload Files (Maximum image file size - 1.5 MB, other file size - 10 MB, total size - not more than 50 MB)

Email
Password