Posted by Bob on May 21, 2004 at 18:10:01:
The initial share price isn’t par value. If it were, you couldn’t set par value to 0.001 per share.
can initial shareholders pay different prices? - Posted by Bob
Posted by Bob on May 19, 2004 at 23:29:00:
I know that profits & losses must be distributed pro-rata in S-corps, but it seems to me that you can get much the same effect of special allocations by having the shareholders pay different prices for their shares. For example, two people with $10k want to start a business and split profits 60/40. One buys 60 shares for $166.67/share and the other buys 40 shares for $250/share. Is this kosher?
Re: can initial shareholders pay different prices? - Posted by JOHN K HASLACH, CPA MST
Posted by JOHN K HASLACH, CPA MST on May 20, 2004 at 09:18:08:
Allocations generally need to be based on the number of shares a shareholder owns.
Re: can initial shareholders pay different prices? - Posted by Bob
Posted by Bob on May 20, 2004 at 14:12:52:
>Allocations generally need to be based on the number of shares a shareholder owns
True, but that wasn’t my question.
Re: can initial shareholders pay different prices? - Posted by eric
Posted by eric on May 21, 2004 at 10:37:13:
I believe that the initial shares would all need to have the same par value, i.e be sold at the same price. Otherwise, as the value of the corp increases (or decreases), the ratio of ownership would change over time. If you had different classes of stock, those different classes could be sold at different prices, but if memory serves me correctly, an S-corp can only have one class of stock.