S Corp Stock Questions

[erchess]

Most readers of this board know that an S Corp can have only one class of stock. But

1. Can it call that class "Preferred Stock" and if not why not? Reason newly organizing S Corp would like to call its stock preferred stock is that one shareholder wants to get a loan and lender would supposedly prefer that he have Preferred Stock. It strikes me as nonsensical to have Preferred Stock when there is no other stock to which it is Preferred.

2. Who do you get to print the stock certificates?

[dsi]

With the exception of voting rights, all rights MUST be identical for EACH outstanding share of of S-corp stock. Thus, an s-corp may have, or be authorized to have, common or preferred stock. Check out IRC 1361(b)(1)(D) and 1361 (c)(4). Furthermore, it is possible that warrants, options, convertible debentures, and proxies do not create a second class of stock.

[erchess]

That's great DSI - now who can print the stock certificates?

[dsi]

There are several companies spread across the country who can do this for you. I've always ordered by corporate kits through a company called Parasec. 877-727-2732

[DaveO]

Typical lender that doesn't know s*** from apple butter. Preferred stock typically has no voting rights. Kind of hard to run a corporation without voting. Also it typically pays a dividend which S-Corps do not.