--- title: "How a Private Company Issues a New Share Class for 506(c)" date: "2026-11-04T17:01:09.550Z" date_modified: "2026-11-04T17:01:09.550Z" author: "Commertize Desk" canonical_url: "https://commertize.com/news/how-a-private-company-issues-a-new-share-class-for-506-c" summary: "A step-by-step walk through authorizing a new share class for a Rule 506(c) raise, from the board resolution to the Form D due 15 days after first sale." asset_classes: [] sources: - "https://delcode.delaware.gov/title8/c001/sc08/index.html" - "https://www.ecfr.gov/current/title-17/section-230.506" - "https://www.sec.gov/rules-regulations/no-action-interpretive-exemptive-letters/division-corporation-finance-no-action/latham-watkins-503c-031225" - "https://www.ecfr.gov/current/title-17/section-230.144" - "https://www.ecfr.gov/current/title-17/section-230.503" --- # How a Private Company Issues a New Share Class for 506(c) By Commertize Desk ยท Published 3 November 2026 Here is what happens, step by step, when a private company creates a new share class so it can sell it to outside investors without forming a new entity. The sequence runs from a reading of the charter, to a board resolution, a stockholder vote, a filed amendment, a verification file for each buyer, and a notice filing with the SEC within 15 days of the first sale. None of it is exotic. The order matters because each step depends on paper produced by the one before it. A company that signs subscription agreements before the class legally exists has sold something it did not have, and a digital register does not cure that. ## Step 1: read the charter and the stockholder agreements The certificate of incorporation states which classes are authorized and how many shares sit in each. If the class the company wants to sell does not exist, or is authorized in too few shares, the charter must be amended before anything is sold. Under [Section 242 of the Delaware General Corporation Law](https://delcode.delaware.gov/title8/c001/sc08/index.html), as in force on 1 August 2026, an amendment needs board approval and then, under the default rule in Section 242(b)(1), the holders of a majority of the outstanding voting power. Where the amendment adversely alters the powers, preferences or special rights of an existing class, Section 242(b)(2) adds a separate vote of that class unless the charter has opted out. The stockholder agreements are the second read. Preemptive rights, rights of first refusal, protective provisions and consent rights from a prior financing round can each block the issuance or re-route part of it to existing holders. Each one needs a written waiver or a formal exercise before closing. Counsel usually produces a one-page table: right, holder, trigger, waiver obtained or not. ## Step 2: the board authorizes the class and the offering The board adopts resolutions that approve the amendment and recommend it to stockholders, approve the form of purchase agreement, set the price or the pricing method, set a maximum size, and name the officers who may sign. Many venture-backed companies already have "blank check" preferred stock authorized under Section 151, which lets the board fix the terms of a new series by filing a certificate of designation without a further stockholder vote. That shortcut only works if the charter has unissued preferred available and the terms fit inside what the charter permits. ## Step 3: stockholders approve and the amendment is filed If the charter allows action by written consent under Section 228, the majority holders can sign rather than meet. The certificate of amendment is then filed with the Delaware Secretary of State. The class exists when that filing becomes effective, not when the board voted. The company updates its stock ledger to show the new authorized shares at zero issued. This is the moment a tokenized register can be configured, because the class it will record now has a legal name and a share count. The distinction between a register that records a share class and one that records an asset is covered in [tokenized share classes versus tokenized assets](https://commertize.com/news/tokenized-share-classes-vs-tokenized-assets). ## Step 4: build the verification file for each buyer [Rule 506(c)](https://www.ecfr.gov/current/title-17/section-230.506), in the form current on 1 November 2026, lets the company solicit publicly on three conditions: every purchaser is an accredited investor, the company takes reasonable steps to verify that, and no covered person is disqualified under the bad-actor provisions of Rule 506(d). The rule's non-exclusive list of verification methods includes tax forms for the income test, bank and brokerage statements for the net-worth test, and a written confirmation from a broker-dealer, registered investment adviser, licensed attorney or CPA dated within the prior three months. The SEC's Division of Corporation Finance added a simpler path in a [no-action letter dated 12 March 2025](https://www.sec.gov/rules-regulations/no-action-interpretive-exemptive-letters/division-corporation-finance-no-action/latham-watkins-503c-031225). An issuer may treat a minimum investment as a reasonable step when the minimum is at least $200,000 for a natural person or $1,000,000 for an entity, the purchaser represents in writing that it is accredited and that the investment is not financed by a third party for the purpose of the offering, and the issuer has no actual knowledge to the contrary. For a company that wants smaller tickets, the document-based methods remain the route, and the verification file for each buyer should sit beside the signed subscription agreement. The history of how the rule has been used is in [Rule 506(c) and digital capital raising](https://commertize.com/news/rule-506-c-and-the-rise-of-digital-capital-raising). ## Step 5: close, legend and record At closing the company receives funds, countersigns the subscription agreements, and records the issuance. The shares are restricted securities. Under [Rule 144(d)](https://www.ecfr.gov/current/title-17/section-230.144), a holder of a company that does not file reports with the SEC must hold for one year before the rule's resale safe harbor opens, and Rule 502(d) requires the issuer to take reasonable care that buyers are not acting as underwriters, which in practice means a legend and a transfer restriction in the register. What the one-year clock means for a holder who wants out early is set out in [Rule 144 holding periods for private investors](https://commertize.com/news/rule-144-holding-period-when-cre-investors-can-sell). On a digital register, the legend becomes a transfer rule enforced by the register itself. The register still records the same class, the same share count, and the same restriction that the paper version would. That is the point of the earlier steps: a register can only enforce restrictions that the charter and the subscription documents actually created. ## Step 6: file Form D within 15 days [Rule 503](https://www.ecfr.gov/current/title-17/section-230.503) requires Form D to be filed no later than 15 calendar days after the first sale of securities in the offering. The filing names the exemption relied on, the size, the minimum investment and the sales compensation paid. States may require a notice filing and a fee for a Rule 506 offering, though they cannot impose their own registration review. An amendment to Form D is due annually while the offering continues and whenever a material fact in the earlier filing changes. ## What the existing holders see afterwards Three things change for holders who were there before the raise. Their percentage ownership falls unless they exercised preemptive rights. The new class may carry a preference, a consent right or a different distribution order that sits ahead of theirs. And the register now carries two classes with different transfer restrictions and different holding-period start dates, which is why the stock ledger, whether paper or digital, must show class, issue date and restriction for every line. A plain-English definition of what a digital register adds and does not add is in [a plain-English definition of RWA tokenization](https://commertize.com/news/what-is-rwa-tokenization-a-plain-english-definition). ## What to do next If you have a private company share class you are considering bringing to market, start at [Commertize's sponsor intake for tokenizing an asset](https://commertize.com/tokenize). Prefer email? Send a short asset summary to deals@commertize.com. We reply within one business day, with no obligation to engage us.