When corporations were first introduced in Delaware in 1875, you had to have at least three people working together to form a corporation. The whole idea of a single person corporation was not even envisioned by the early lawmakers. But entrepreneurs demanded control so they would include their lawyer and perhaps a secretary to be the stand-in shareholders to meet the requirement.

The law was also very strict about the separation between the three tiers of power in a corporation: the Shareholders, the Directors and the Officers. It was unthinkable that one person could be all three all at once. Every year the company would have to have a Shareholders’ meeting, with a few Board of Director’s meetings throughout the year, to direct the Officers of the company on the day-to-day affairs.

Delaware, as usual, was the first state to respond to this need for control, desire to own, run and operate a company by a single person or a small tight-knit group by passing legislation allowing a company structure where the shareholders run the company with no directors at all. This is the “Close” or “Closely Held Company”.

This blog category will help you understand all the benefits of a Close Corporation as time goes on. We invite you to join the conversation by leaving a question or comment.

Stock sounds like a substantial word, doesn’t it? It reminds one of livestock (cattle) or rolling stock (rail cars), or stock-in-trade (physical inventory), but it is none of these. Shares of Stock in a company are worth just about whatever you can get for them, and that can fluctuate, as we’ve all experienced watching the Stock Market. In reality, they are a piece of paper that could be worth any amount.

Shares of stock are first authorized by the company’s Certificate of Incorporation (or later amendments) that state the number of shares the company has in total. Authorized means the total number you can own or sell. Authorized shares can be increased by filing an amendment to the Certificate of Incorporation with the Secretary of State’s Office. If a majority of directors and stockholders approve, you can raise the number of shares and sell them to raise capital for the company as often as you need to.

Issued shares is the number of authorized shares that have actually been issued to individuals or corporate owners of the company including founders, managers, insiders and investors.

Stock in private companies is valued differently than stock in public companies. We’ll talk more about that in later blog posts.

Just to complicate things, it must be mentioned that a Delaware General Corporation can have more than one “Class” of stock. Specifically, every corporation must start with one class of “Common” stock that is entitled to one vote per share. On top of that, you might want to consider a separate class of stock authorized as “Preferred” shares that you can use to raise money or retain power. An upcoming blog post will focus on Preferred Stock and its uses.

This blog category will help you understand stock and see how others have used it to their advantage. We invite you to join the conversation and leave a question or comment.

Donny Deutsch from CNBC wrote a new book called, The Big Idea that discusses how to make your entrepreneurial dreams come true.

Below is his formula for success:

• Acknowledge it
• Own it
• Make it
• Wear it
• Sell it

Tell us YOUR BIG IDEA in the comments!