Articles of Incorporation Definition
Articles of incorporation are also known as a corporate charter or a certificate of incorporation and it can be defined as a set of documents that are filed with a government institution for the purpose of legally documenting the foundation of a company and it is mandatory for the ones who are willing to incorporate a business.
It is a documenting process through which an organization can be affirmed with the status of a separate business entity. It acts as a public record and offers significant information pertaining to the company such as its name, contact number, registered address, date of incorporation, and financial well being, type of corporate structure, and so on.
Contents of the Articles of Incorporation
The components are as follows –
- Name of the company
- Name of the registered agent
- Address of the registered agent
- Type of corporate structure (professional corporation, profit corporation, non-profit corporation, non-stock corporation, etc)
- Corporate purpose
- Names of the first BOD (board of directors)
- Addresses and other personal information of the first BOD
- If the corporation is established for a limited span of time than it must also provide the duration for which the same has been formed
- Number of authorized equity shares
- Type of authorized equity shares
- Details of the incorporator such as name, address, and signature.
A company likes to document itself for Articles of Incorporation out of purposes like to avail tax benefits, establishing itself for perpetual existence, safeguard itself from liabilities, and to enhance its corporate image as well.
The incorporator must necessarily meet the below-mentioned requirements –
- Application along with the fees – The incorporator must file the application along with the documents and pay the mandatory filing fee to the registrar or the Secretary of the State when applying for the company’s incorporation. The filing fee varies from the type of entity and the country it is getting incorporated in.
- Required provisions – The provisions provided in the Articles must be necessarily abided and complied by the state statutes. The mandatory provisions comprise the purpose and reason of incorporation along with its name and registered address. The corporate must be precise with its purpose of incorporation and must reflect exactly the same in its Articles of Incorporation too. The duration of the corporate can either be perpetual or for a limited time period. It must also offer information like the duration for which the corporate wishes to be affirmed with the status of the separate legal entity along with the information pertaining to shares of stock and its par value.
Example of Articles of Incorporation
Below is the template for ABC Limited
Articles of Incorporation
ARTICLES OF INCORPORATION
Article I – Name
The name of this Corporation is ABC Limited
Article II – Purpose
The purpose of the corporation is to engage in any lawful act or activity
Article III – Duration
The corporation will have a perpetual existence
Article IV – Principal Place of Business
The address of the principal place is:
50 Oakland Avenue, #106
Article V – Shares Authorized
The company is authorized for issuing only 10,000 shares of “Common Stock”
Article VI – Registered Agent for Service of Process
The name and address in the U.S.A of the corporation’s initial agent for service of process are:
990 Oakland Avenue, #536
Article VII – Board of Directors
As per the corporation’s bylaws, 2 directors will be elected by the shareholders. Initially the following were the board of directors:
[BOARD MEMBER NAME 2]
DATED: [SIGNATURE DATE]
[INCORPORATOR NAME], Incorporator
How to Write Articles of Incorporation?
A corporate can either prepare Articles of Incorporation by itself or may even choose to contact a professional for the same purpose. It must be backed up with all the necessary documents and details. However, this does not mean that it must be extensive or highly complicated in nature. If it is self-made then it shall be accepted for the filing purpose only if it has the required basic minimum information.
The Secretary of States’ website has a pre-designed incorporation template for companies and it is sufficient enough for meeting the basic filing requirements. Using this template the time taken by the companies will be reduced. The companies can simply use the template and accordingly fill in all the blanks to easily create their articles of incorporation. The companies can even choose to add further information if at all required. Taking the services of a business lawyer will ensure that all the required information is included as per the state rules and requirements.
How to File Articles of Incorporation?
A company that is seeking to file its articles of incorporation will primarily need to choose a particular state in which it wishes to incorporate its business. A company that performs its business operations in a single state can choose to incorporate in that state. But if the company performs its business operations in multiple states, then it can choose to incorporate its business in a state that it is more comfortable with.
It must be filed with the secretary of states’ office but for a few states, the case can be slightly different since these states would require the documentation to be done from different offices. Filing an application will need the company to pay an amount as the filing fee.
The company will legally be affirmed with a corporate status upon the approval of the secretary of state’s office.
A corporate must definitely opt for drafting its Articles of Incorporation. The corporate after being affirmed with the status of a separate legal entity can issue varied types of securities instead of just regular stocks. It offers numerous benefits like tax benefits, safeguards the corporate from creditors and even enhances the corporate image of a corporate. They allow the corporation to be recognized as a separate legal entity. It acts as a charter to enable an organization to be recognized with its establishment.
The Articles of incorporation are also known as a corporate charter, company constitution, certificate of incorporation and business incorporation papers. It affirms the separate legal entity of a company and it needs to be filed and approved by the Secretary of State’s office. It must also offer information pertaining to its internal affairs. Restrictions upon the right of the investors, transfer of shares with respect to the share purchase and the company’s right to buy back its own shares must also be provided in the Articles of Incorporation.
This has been a guide to the Articles of Incorporation and its definition. Here we discuss how to write & file articles of incorporation along with an example, contents, and importance. You can learn more about accounting from the following articles –