Once the company’s board of directors has passed a resolution consenting to the issuance of preferred stock to investors, the following documents need to be prepared:

• Stock purchase agreement (SPA). The SPA is a contract between the company and the investors that sets out the terms and conditions of the stock purchase. The SPA typically includes the following information:
  • The number of shares of preferred stock being purchased
  • The purchase price per share
  • The payment terms
  • The rights and privileges of the preferred shareholders
  • The representations and warranties of the company and the investors
  • The conditions to closing
• Articles of incorporation (AOI). The AOI are the company’s governing documents and set out the basic structure of the company, including the types of stock that the company is authorized to issue. The AOI may need to be amended to reflect the issuance of the new preferred stock.
• Certificate of designation. The certificate of designation is a document that sets out the specific terms and conditions of the new series of preferred stock. The certificate of designation is typically filed with the state corporation commission where the company is incorporated.
• Share certificates. Share certificates are physical certificates that represent the ownership of shares of stock. Share certificates need to be issued to the new preferred shareholders.

Documents to be filed with the corporation authorities

The following documents need to be filed with the state corporation commission where the company is incorporated:

• Stock purchase agreement. The SPA does not need to be filed with the corporation authorities, but it is a good practice to do so. This is because the SPA is a public record and can be accessed by anyone.
• Article of incorporation amendment. If the AOI need to be amended to reflect the issuance of the new preferred stock, then an amendment to the AOI must be filed with the corporation authorities.
• Certificate of designation. The certificate of designation must be filed with the corporation authorities.

Need for an attorney to draft a corporation registration document

Whether or not an attorney is needed to draft a corporation registration document depends on the specific circumstances of the company. If the company is already incorporated and is simply issuing new preferred stock, then an attorney may not be necessary. However, if the company is not yet incorporated or is making other significant changes to its corporate structure, then it is a good idea to consult with an attorney.

An attorney can help the company to:

• Determine the correct type of corporate structure for its needs
• Draft and file the necessary incorporation documents
• Prepare the stock purchase agreement and other closing documents
• Ensure that the company complies with all applicable state and federal laws

Additional considerations

In addition to the documents listed above, the company may also need to prepare other documents, such as:

• Investor subscription agreement. This document is typically used when the company is raising a significant amount of capital from investors. The subscription agreement sets out the terms and conditions of the investment, including the amount of money being invested, the number of shares of stock being purchased, and the rights and privileges of the investors.
• Offering memorandum (OM). An OM is a document that is used to market the company’s securities to potential investors. The OM must contain certain information, such as the company’s business plan, financial statements, and risk factors.
• Private placement memorandum (PPM). A PPM is a document that is used to market the company’s securities to accredited investors. The PPM must contain the same information as an OM, but it is typically more detailed.

The company may also need to register its securities with the Securities and Exchange Commission (SEC). This requirement depends on a number of factors, such as the type of securities being offered, the amount of money being raised, and the number of investors.

Conclusion

The process of issuing preferred stock to investors can be complex and involves a number of legal and regulatory requirements. It is important for the company to consult with an attorney to ensure that it complies with all applicable laws and regulations.