An Overview of Foundational Corporate Documents
- Jul 25 2017
There are a number of steps to form a corporation, including selecting a name, obtaining the necessary licenses and permits, paying certain fees, and filing foundational documents with the appropriate state agency. While an attorney can help prepare and file the required papers, the owners, officers and directors should have a basic understanding of these documents.
Articles of Incorporation
The first underlying document is the Articles of Incorporation, which states the corporate name, business address, registered agent and purpose of the business. This is typically, but not always, a generic statement that the corporation will conduct any lawful business in the state in accordance with its objectives. In addition, the type and amount of authorized stock that will be issued (common or preferred) must be established. This document should also contain an authorization for the corporation to indemnify its officers and directors.
Bylaws are the formal rules regarding the internal operations of a corporation. This document outlines the corporate structure and establishes the rights and powers of the shareholders, officers and directors. Bylaws specify how officers and directors are nominated and elected, as well as their responsibilities. In addition, this document should clarify how disputes among the parties will be resolved. Bylaws establish where and when shareholder and director meetings will be held, whether quarterly, annually or at other times, what constitutes a quorum, as well as number of directors on the board of directors, voting, and proxy rules. This document should also contain information on the issuance of shares of stock and other operational details.
After corporate existence is commenced, an initial organizational meeting of the principals must be held in order to adopt the bylaws, elect directors, issue stock, authorized banking powers, and to conduct any other business. All of these activities must be memorialized in meeting minutes, which must also be prepared during any subsequent meetings.
Stock certificates are the record of any stock in the corporation that was issued to the stockholders. These certificates are the record of ownership of the corporation.
Once these foundational documents are in place, a corporation is also required to keep complete and accurate books and records of account and must maintain a record containing the names and addresses of all shareholders.
Incorporating is a complicated process and one that requires careful analysis and consideration. An experienced business law attorney at Schneiders & Associates can help you prepare and file the necessary foundational documents for your corporation.
Posted in: Business & Corporate