Thursday, September 6, 2018

Who the Heck Signs Our Stock Certificates?

One of the first things a new corporation must do is issue stock certificates to its founding stockholders (assuming the corporation has not elected to issue uncertificated shares, of course). But who should sign the stock certificates on behalf of the corporation?

To answer that question, the corporation should look first to its Bylaws. For example, I often use a form of Bylaws for Texas corporations which provide that the share certificates should be signed by "the President or a vice president and the Secretary or an assistant secretary."

But what do the underlying corporate statutes provide?

The answer is not as easy to find as you might expect. There is nothing in Title 2 (Corporations) of the Texas Business Organizations Code (TBOC) addressing the issue. Instead, one must look to Title 1 (General Provisions).  Specifically, Section 3.203 of the TBOC provides that a Texas corporation's stock certificates must be signed by "[t]he managerial official or officials of [the corporation] authorized by the [certificate of formation and bylaws]." Section 1.002(52) of the TBOC defines "managerial official" as an officer or a governing person. Section 1.002(37) defines "governing person" as a person serving as part of the "governing authority." Section 1.002(35)(A) defines the "governing authority" of a corporation as its board of directors. Accordingly, a Texas corporation's stock certificate may be signed by any of the corporation's officer(s) or director(s) as authorized in the corporation's certificate of formation and bylaws.  I have never seen a certificate of formation which addressed this issue, though it is a hypothetical possibility. So as a practical matter, that means the issue is governed by the Texas corporation's Bylaws. 

Section 158 of the Delaware General Corporation Law is much easier to navigate. It provides that certificates representing shares of stock in a Delaware corporation must be signed by "2 authorized officers of the corporation."

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