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Raising capital online? Check your bylaws

If you raise capital online, you're probably a New Economy, Internet 4.0 type of company, right? Leverage the cloud, move fast, break rules (not securities rules), create synergies, it's all about the hustle. Right?

Maybe. Some of you new era companies should be huddling in your hoodies for shame, 'cos some of you have distinctly old school bylaws when it somes to stock certificates.

Yes, stock certificates. Those bits of paper with incomprehensible things written on them that say who owns shares in your company. Some of you still have bylaws that say that paper stock certificates MUST be issued. And you are engaging great new transfer agents who do everything online and are able to deal with 3,000 new shareholders and charging very low fees for it.

But you are not supposed to be doing that because your bylaws don't say you can issue shares in "book-entry" (ie, paperless) form. We have come across this situation several times recently!

So do check your bylaws to make sure you are not supposed to be writing numbers on bits of paper to show who owns what. When CrowdCheck is doing due diligence, we are going to make a snarky comment in our reports if your bylaws don't permit you to be recording stock ownership in digital-only form.