Articles of Incorporation, sometimes referred to as a Certificate of Incorporation or Corporate Charter, is a legal document required to establish a corporation. This document is filed with the Secretary of State or corresponding state agency and complies with the general corporation laws of the state in which the corporation is being formed. The Articles offer a blueprint of the corporation’s structure and purpose.
Key Components of Articles of Incorporation
Corporate Name
The Articles of Incorporation must include the corporation’s name, which must be unique and distinguishable from other registered business entities within the state.
Purpose of the Corporation
Often, the purpose of the corporation is stated in broad terms, allowing for flexibility in the corporation’s activities.
Duration of the Corporation
Many corporations are formed with a perpetual existence, but it is possible to stipulate a fixed term if desired.
Registered Agent and Office
The corporation must designate a registered agent and office within the state to receive legal documents and government notices.
Incorporators
The names and addresses of the individuals responsible for forming the corporation (incorporators) must be listed.
Initial Directors
Names and addresses of the individuals who will serve on the board of directors until the first shareholder meeting.
Stock Information
Details about the corporation’s stock structure, including the number and type of shares authorized to be issued, and the par value of those shares, if any.
Filing Process
Preparation
The incorporators prepare the Articles of Incorporation according to the state’s guidelines. Some states offer templates or forms to facilitate this process.
Submission
The completed document is submitted to the Secretary of State’s office, along with the required filing fee. Submission can be done online or by mail in most states.
Certificate of Incorporation
Once the state reviews and accepts the Articles, a Certificate of Incorporation is issued, signifying the official formation of the corporation.
Historical Context
Incorporation laws trace back to Roman times, but the modern concept developed during the Industrial Revolution. In the United States, the first general incorporation law allowing businesses to incorporate without individual legislative acts was passed in New York in 1811.
Applicability and Benefits
Limited Liability
Incorporation provides shareholders with limited liability, protecting personal assets from business debts and obligations.
Ease of Capital Raising
Corporations can issue stock to raise capital, making it easier to attract investors.
Perpetual Existence
Unlike sole proprietorships or partnerships, corporations can continue indefinitely beyond the life of their founders.
Comparisons to Related Terms
Bylaws
While Articles of Incorporation establish the corporation, bylaws provide internal governance rules and procedures for the corporation’s day-to-day operations.
LLC Operating Agreement
Similar to Articles of Incorporation, but for Limited Liability Companies (LLCs), an Operating Agreement outlines the internal management structure and operating procedures.
FAQs
What is the difference between Articles of Incorporation and a business license?
Can I amend the Articles of Incorporation?
Is incorporation required for all businesses?
References
- State Government Websites: For specific form templates and filing instructions.
- Internal Revenue Service (IRS): Guidelines on corporate taxation.
- Books: “Incorporate Your Business: A Legal Guide to Forming a Corporation in Your State” by Anthony Mancuso.
Summary
Articles of Incorporation form the legal foundation of a corporation. They provide a detailed outline of the corporate entity, its purpose, structure, and legal standing. Filing this document with the state ensures the corporation is recognized under state law and can enjoy benefits such as limited liability, ease of raising capital, and perpetual existence. Understanding and properly preparing Articles of Incorporation is a crucial step in the process of forming a corporation.
