Can I transfer shares of my stock in my company to my wife without a shareholder's meeting?

Full Question:

I run a small company and am thinking whether or not I should transfer my shares to my wife. If I transfer my shares to my wife, is my company required to hold a shareholder's meeting? or is my company needed to obtain the consent of the other shareholders? What happens in the case of a divorce?
05/27/2009   |   Category: Corporations   |   State: Hawaii   |   #16789

Answer:

Stock is transferable on the books of the corporation in such manner and under such regulations as may be provided in the articles of incorporation or in the by-laws. For example, the articles of incorporation may provide that in case a stockholder desires to sell, transfer or otherwise dispose of his shares of stock, the corporation or some stockholder or stockholders thereof shall have a preferential right to purchase such shares. I suggest you read the articles and bylaws carefully to determine the rights and obligations regarding a transfer of stock.

The Articles of Incorporation is a document that must be filed with a state in order to incorporate. Information typically required to be included are the name and address of the corporation, its general purpose and the number and type of shares of stock to be issued. The procedure for an amendment of a corporate charter varies by state, corporate bylaws, and type of corporation, but generally involves passage of a resolution and filing of an amended set of articles with the secretary of state of incorporation.

Each portion of ownership of a corporation is known as a share of stock. An individual may own one share of stock or several shares. Shareholders have certain rights when it comes to the corporation. The most important one is the right to vote, for example, to elect the corporation's board of directors or change the corporation's bylaws. The articles of incorporation define how many shares, or ownership portions, the corporation will issue as well as what types of stock the corporation will issue. A corporation that issues only one type of stock issues common shares, or common stock. Common shareholders have the right to vote and also the right to the corporation's net assets, also known as dividends. A corporation may designate different classes of common stock, with different voting and dividend rights for those shareholders. Preferred stock is a type of stock issued by corporations that in most cases do not grant the shareholder the right to vote. However, owners of preferred stock usually have greater rights to receive dividends than do owners of common stock.

A corporation must have bylaws, although states generally do not require that corporations file the bylaws with the secretary of state. Bylaws are rules that dictate how the corporation is going to be run, including rules regarding the conduct of corporate officers, directors, and shareholders. Corporations need to follow certain corporate formalities such as updating their corporate records, including bylaws, which are fairly easy to amend.

Upon granting a divorce, the court will divide the estate of the parties, real personal or mixed, whether community, joint or separate as it deems just and equitable after consideration of the following factors:

1. The respective merits of the parties;

2. The relative abilities of the parties;

3. The condition in which each party will be left by the divorce;

4. The burdens imposed upon either party for the benefit of any children of the marriage; and,

5. All other circumstances of the case.