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Is this possible? I dont mean sell shares of a company that makes apps but shares of an app itself without a company.

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  • It would be helpful to know what benefit you hope to achieve by doing so.
    – ohwilleke
    Commented Apr 29 at 16:04

3 Answers 3

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Yes.

You can create a company that owns the app and sell shares in that company.

Also, depending on your situation, you might also consider a simple revenue sharing agreement instead of a corporation. This is revenue (top line, before expenses) not equity (like shares would be). Shareholders are never entitled to dividends in a corporation. Dividends have to be voted and approved by the board of directors.

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Yes, and even without a company. Though it will be significantly more complex and annoying to just founding an LTD with the ownership of that app.

That's because you can just write almost any (non-illegal) contracts, so get yourself some (good) lawyers and start texting your all-custom share-selling contract(s). You may get into trouble because what you're selling is different from what people may assume you're selling when you say shares so be open and direct about the weird setup you crafted.

Or just found a company that holds the app and use the widely known, tested and tried template contracts for exactly this purpose, aka take the easy, cheap and safe route

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  • A "company" is rather loosely defined as any group engaged in commercial practice. Forming contracts to share business ownership or profits is almost certainly a form of partnership, which is a type of company. Perhaps you mean to say you don't need to incorporate, but I have a hard time seeing how you can share assets and profits without in practice having some type of company, whether you choose to call it one or not. Seems silly to say "it's not a company, just a legal arrangement to share ownership of a commercial entity". Commented Apr 29 at 16:32
  • @NuclearHoagie from the context it is very obvious that I am talking about official incorporation as opposed to a network of overlapping contracts that do basically the same but avoid official incorporation. And that it's silly and unnecessarily complex for no benefit is exactly my point.
    – Hobbamok
    Commented May 30 at 10:38
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What is proposed seems to be some version of either co-ownership of the copyright, or a general partnership, or an investment contract.

It is possible to do this, but unclear why someone would want to do it.

If this was done, the shares in the app would be a "security" so they would be subject to state and federal securities laws.

Since it isn't a limited liability entity, the shareholders in the app would have unlimited liability for any liability arising out of the app.

This approach would leave lots of uncertainty with respect to the legal rights of you and the shareholders that would have to be resolved at great expense. For example:

  1. Do the shareholders get all of the revenue from the app, or only revenues after expenses incurred in generating that revenue?

  2. Who has management authority over issues related to the app?

  3. How will the shareholders be taxed and will you have to send them form 1099?

  4. Do you have to screen shareholders to determine if they are accredited investors for securities law purposes?

  5. Do you have to screen shareholders to make sure that they are not violating international sanction and are not violating money laundering rules?

  6. How will title to the app's copyright be held?

Ultimately, while this could be done without a company, it isn't obvious what benefit there would be to setting up a transaction in this way.

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