Five essential documents needed to organize a corporation

The five essential documents required to fully organize a small
corporation

Articles of Incorporation – This document, which is also
sometimes referred to as the Corporate Charter or Certificate
of Incorporation, is the official document filed with the
Corporate Filing Office (usually the secretary of state’s office).
It sets out the basic organization and structure of the
corporation. The required contents vary from state to state
but usually include, at a minimum, the name of the corporation,
the name and address of the incorporator, the name and
address of the registered agent, and the stock structure of the
corporation (how many shares of stock are authorized to be
issued). Optional provisions of the articles of incorporation may
include such items as special stock structure for preferred
shares of stock, the names of the initial directors, pre-emptive
rights for shareholders and an indemnification clause for
directors. Any changes made to the articles of incorporation
must be approved by shareholders and filed with the state.
Most Corporate Filing Offices have standard forms available
for articles of incorporation.

Bylaws – This document is not filed with the Corporate Filing
Office but is an essential document for the organization of the
corporation. Bylaws contain the regulations and rules adopted
by a corporation to govern its internal affairs. Bylaws provide
the framework for conducting corporate business such as:
requirements for holding meeting, voting requirements,
quorum requirements, qualifications and appointment
procedures for directors and officers, etc. The state
corporation law provides the requirements for bylaws. Most
bylaws are fairly standard but are important and should be
read and understood by the officers, directors, and
shareholders of the corporation.

Minutes of Organizational Meeting – Once Articles of
Incorporation are filed with the Corporate Filing Office, the
initial directors of the corporation should hold an
organizational meeting. (If initial directors were not named in
the Articles of Incorporation, then the incorporator can
appoint initial directors by way of a Consent in Lieu of
Corporate Meeting or by adopting a resolution for that
purpose.) The main business normally conducted at an
organizational meeting includes the approval and ratification of
the Articles of Incorporation, adoption of bylaws, the
appointment of officers and the authorization for the issuance
of shares of stock. Other business may also be conducted as
needed.

If all directors are in agreement, then the business of an
organizational meeting can also be conducted by preparing a
Consent in Lieu of Corporate Meeting document providing
resolutions for the various items of business described in the
paragraph above. The consent must be signed by all directors.

Stock Certificates – Shareholders own a corporation and stock
certificates are evidence of their stock ownership. Certificates
are not required in most states, but it is still considered good
practice to issue certificates to help provide evidence of the
organization of the corporation. From a purely practical point
of view, people like to have something to show ownership and
shares of stock provide that. However, the real authority for
ownership of shares is a board of director’s resolution
authorizing shares to be issued to a certain individual or entity.

Shareholder’s Agreement (optional) – Some shareholders
desire or need to enter into a more specific agreement
concerning their relationship, especially with respect to the
issues of what happens when a shareholder dies or decides to
leave the business. Sometimes these issues are covered in the
bylaws, but most often special provisions are set out in a
separate agreement such as a Shareholder’s Agreement or a
Buy-Sell Agreement. These documents may contain special
procedures and requirements that must be followed if a
shareholder dies or decides to leave the corporation, and can
also provide a formula or procedure for determining the value
of shares.


Author: Robert Montgomery

Attorney Robert Montgomery has been counseling and incorporating businesses for more than 20 years. During that time, he's helped set up more than a 1000 corporations and limited liability companies (LLC's). He's a business owner himself and has been corporate legal counsel for numerous small business corporations. He's presented lectures and seminars on the benefits and procedures involved with incorporating or forming LLC's and how to operate them for maximum benefit. View all posts by Robert Montgomery


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