The Articles of Incorporation (sometimes also referred to as the Certificate of Incorporation or the Corporate Charter) are the primary rules governing the management of a corporation A corporation is a legal entity separate from the persons that own it. In British tradition it is the term designating a body corporate, where it can be either a corporation sole or a corporation aggregate (involving more persons). In American and, increasingly, international usage, the term denotes a body corporate formed to conduct business, and in the United States The United States of America is a federal constitutional republic comprising fifty states and a federal district. The country is situated mostly in central North America, where its forty-eight contiguous states and Washington, D.C., the capital district, lie between the Pacific and Atlantic Oceans, bordered by Canada to the north and Mexico to the and Canada, and are filed with a state A U.S. state is any one of 50 subnational entities of the United States of America that share sovereignty with the federal government . Because of this shared sovereignty, an American is a citizen both of the federal entity and of his or her state of domicile. However, state citizenship is very flexible, and no government approval is required to or other regulatory agency. The equivalent in the United Kingdom The United Kingdom of Great Britain and Northern Ireland is a sovereign state located off the northwestern coast of continental Europe. It is an island country, spanning an archipelago including Great Britain, the northeastern part of Ireland, and many small islands. Northern Ireland is the only part of the UK with a land border, sharing it with and various other countries is Articles of Association.
A corporation's Articles of Incorporation generally provide information such as:
- The corporation's name, which has to be unique from any other corporation in that jurisdiction. As part of the corporation's name, certain words such as "incorporated", "limited", "corporation", (or their abbreviations) or some equivalent term in countries whose language is not English, are usually required as part of the name as a "flag" to indicate to persons doing business with the organization that it is a corporation (with limited liability Limited liability is a concept whereby a person's financial liability is limited to a fixed sum, most commonly the value of a person's investment in a company or partnership with limited liability. In other words, if a company with limited liability is sued, then the plaintiffs are suing the company, not its owners or investors. A shareholder in a) as opposed to an individual or partnership (with unlimited liability). In some cases, certain types of names are prohibited except by special permission, such as words implying the corporation is a government agency or has powers to act in ways it is not otherwise allowed.
- The name of the person(s) organizing the corporation (usually members of the board of directors A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. The body sometimes has a different name, such as board of trustees, board of governors, board of managers, or executive board. It is often simply referred to as "the board.").
- Whether the corporation is a stock corporation A stock corporation is a for-profit corporation which the ownership of the corporation is expressed by shares of stock. This allows for the ownership of the corporation to be readily determined, as shares are property, and are transferrable as any other property such as money, subject to any conditions imposed such as restriction on resale. The or a non-stock corporation A non-stock corporation is a corporation that does not have owners represented by shares of stock. That type of corporation is called a stock corporation. Instead, a non-stock corporation typically has members, who are the functional equivalent of stockholders in a stock corporation Non-stock corporations may also choose to have no members. Most.
- Whether the corporation's existence is permanent In linear algebra, the permanent of a square matrix is a function of the matrix similar to the determinant. The permanent, as well as the determinant, is a polynomial in the entries of the matrix. Both permanent and determinant are special cases of a more general function of a matrix called the immanant or limited for a specific period of time. Generally the rule is that a corporation existence is forever, or until (1) it stops paying the yearly corporate renewal fees or otherwise fails to do something required to continue its existence such as file certain paperwork each year; or (2) it files a request to "wind up and dissolve."
- In some cases, a corporation must state the purposes for which it is formed. Some jurisdictions permit a general statement such as "any lawful purpose" but some require explicit specifications.
- If a non-stock corporation, whether it is for profit In economics, economic profit is the difference between a company's total revenue and its opportunity costs. It is the increase in wealth that an investor has from making an investment, taking into consideration all costs associated with that investment including the opportunity cost of capital or non-profit A nonprofit organization is an organization that does not distribute its surplus funds to owners or shareholders, but instead uses them to help pursue its goals. Examples of NPOs include charities (i.e. charitable organizations) , trade unions, and public arts organizations. Most governments and government agencies meet this definition, but in. However, some jurisdictions differentiate by "for profit" or "non profit" and some by "stock or non-stock".
- In the United States, if a corporation is to be organized as a non-profit, to be recognized as such by the Internal Revenue Service The Internal Revenue Service is the United States federal government agency that collects taxes and enforces the internal revenue laws. It is an agency within the U.S. Department of the Treasury and is responsible for interpretation and application of Federal tax law. The official U.S. Treasury regulations provide (in part):, such as for eligibility for tax exemption, certain specific wording must be included stating no part of the assets of the corporation are to benefit the members.
- If a stock corporation, the number of shares In financial markets, a share is a unit of account for various financial instruments including stocks , and investments in limited partnerships, and REIT's. The common feature of all these is equity participation (limited in the case of preference shares) the corporation A corporation is a legal entity separate from the persons that own it. In British tradition it is the term designating a body corporate, where it can be either a corporation sole or a corporation aggregate (involving more persons). In American and, increasingly, international usage, the term denotes a body corporate formed to conduct business, and is authorized to issue, or the maximum amount in a specific currency of stock that may be issued, e.g. a maximum of $25,000.
- The number and names of the corporation's initial Board of Directors A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. The body sometimes has a different name, such as board of trustees, board of governors, board of managers, or executive board. It is often simply referred to as "the board." (though this is optional in most cases).
- The initial director(s) of the corporation (in some cases the incorporator or the registered agent must be a director, if not an attorney or another corporation).
- The location of the corporation's "registered office" - the location at which legal papers can be served to the corporation if necessary. Some states further require the designation of a Registered Agent A registered agent, in United States business law, is a business or individual designated to receive service of process when a business entity is a party in a legal action such as a lawsuit or summons. The registered agent's address may also be where the state will send the paperwork for the yearly renewal of the business entity's charter. In some: a person to whom such papers could be delivered.
Most states permit a corporation to be formed by one person; in some cases (such as non-profit corporations) it may require three or five or more. This change has come about as a result[citation needed] of Delaware liberalizing its corporation rules to allow corporations to be formed by one person, and states not wanting to lose corporate charters to Delaware had to revise their rules as a result.
Articles of Incorporation vary widely from corporation to corporation, and from jurisdiction to jurisdiction, but generally do not go into great detail about a corporation's operations, which are spelled out in more detail in a company's By-Laws Bylaw can refer to a law of local or limited application, passed under the authority of a higher law specifying what things may be regulated by the bylaw, or it can refer to the internal rules of a company or organisation.
Examples
- Certificate of Incorporation (International Business Machines): Example of a company's Articles of Incorporation now
See also
- Articles of Organization
- Charter A charter is the grant of authority or rights, stating that the granter formally recognizes the prerogative of the recipient to exercise the rights specified. It is implicit that the granter retains superiority , and that the recipient admits a limited (or inferior) status within the relationship, and it is within that sense that charters were
- By-Laws Bylaw can refer to a law of local or limited application, passed under the authority of a higher law specifying what things may be regulated by the bylaw, or it can refer to the internal rules of a company or organisation
- Mission Statement A mission statement is a brief written statement of the purpose of a company or organization. Ideally, a mission statement guides the actions of the organization, spells out its overall goal, provides a sense of direction, and guides decision making for all levels of management
- Operating agreement An operating agreement is an agreement among limited liability company Members governing the LLC's business, and Member's financial and managerial rights and duties. Many states require an LLC to have an Operating Agreement. LLCs operating without an Operating Agreement are governed by the State's default rules contained in the relevant statute
Categories: Corporations law Categories: Companies | Business law | Corporations
