Can U.S. Companies Issue Capital Stock? In-Depth Analysis and Practical Recommendations

Can American Companies Issue Shares? A Deep Dive and Practical Suggestions

Under the commercial legal framework of the United States, the right of companies to issue shares is one of their fundamental rights. This right not only provides companies with an important way to raise funds but also forms a core part of modern corporate systems. From a legal perspective, the Uniform Commercial Code UCC and state corporation laws in the U.S. provide clear legal basis for companies to issue shares. For instance, in Delaware - one of the main company registration locations in the U.S. - corporate law clearly stipulates that as long as the requirements set out in the company's articles of incorporation and shareholder agreements are met, companies can freely issue stocks.

In recent years, with the development of capital markets and technological advancements, the forms and methods of share issuance by companies have become more diversified. For example, some startups have chosen to raise funds through equity crowdfunding, which has, to some extent, lowered investment thresholds and allowed more ordinary investors to participate in the growth process of companies. The application of virtual currencies and blockchain technology has also brought new possibilities to the traditional concept of share capital. Some emerging enterprises have begun exploring the issuance of tokenized shares using blockchain technology. Although this practice is still not fully mature, it has already attracted attention from financial regulatory agencies.

It is worth noting that while U.S. law grants companies the right to issue shares, this does not mean that companies can operate arbitrarily. First, companies must ensure that their issuance actions comply with relevant securities laws. According to the Securities Act of 1933, any public offering needs to be registered with the U.S. Securities and Exchange Commission SEC, unless exempt conditions are met. This means that when designing an issuance plan, companies must fully consider disclosure requirements and avoid penalties due to violations of regulations. Second, companies must also pay attention to protecting the interests of existing shareholders. If the issuance of new shares results in dilution of the original shareholders' stake, then the company needs to obtain prior consent from the relevant shareholders and provide reasonable compensation measures.

From a practical standpoint, when deciding whether to issue shares, enterprises should comprehensively consider multiple factors. The first is the urgency of funding needs. When a company faces short-term cash flow pressure or long-term development bottlenecks, timely introduction of external capital may be a wise choice. However, excessive reliance on equity financing may weaken the control of the founding team, so how to balance capital expansion with management retention is crucial. The second is changes in market conditions. In recent years, increasing global economic uncertainty has led to a decrease in investors' risk tolerance, which requires companies to focus more on prudence and transparency when formulating financing plans.

Additionally, with the widespread adoption of ESG environmental, social, and governance concepts globally, an increasing number of investors are incorporating a company’s social responsibility performance into decision-making considerations. For enterprises hoping to attract such sources of funding, in addition to focusing on financial indicators, they should also actively improve their ESG ratings. For example, by implementing sustainable development strategies and optimizing supply chain management, they can enhance brand image and thus increase attractiveness in the capital market.

In summary, American companies indeed have the right to issue shares, but when exercising this right, they must strictly adhere to laws and regulations and make reasonable plans based on their own circumstances. With the continuous advancement of financial technology and the enhancement of global capital liquidity, we have reason to believe that companies will have more innovative means to achieve a virtuous cycle between value creation and wealth distribution.