Articles of Incorporation

Definition

Articles of incorporation are legal documents filed with a state government to establish the existence of a corporation. This document serves as the foundation of the corporation and outlines essential details such as the corporation's name, purpose, registered agent, and the number of authorized shares. They play a crucial role in formalizing the business entity and provide important information that governs the corporation's operations and structure.

5 Must Know Facts For Your Next Test

1. Filing articles of incorporation is a necessary step to legally create a corporation in most jurisdictions.
2. The information included in articles of incorporation can vary by state but typically includes the corporation's name, duration, purpose, and details about stock issuance.
3. Articles of incorporation must be filed with the appropriate state authority, usually the Secretary of State, and may require payment of a filing fee.
4. Once approved, the articles become public record, providing transparency regarding the corporation's structure and purpose.
5. Amendments to the articles of incorporation can be made later to reflect changes in corporate structure or governance, but these changes must also be filed with the state.

Review Questions

• What essential information must be included in the articles of incorporation, and why is each component important?
  • Essential information in the articles of incorporation includes the corporation's name, purpose, registered agent, and details on authorized shares. The name identifies the business legally; the purpose defines what type of activities the corporation will engage in; the registered agent ensures there is an official point of contact for legal matters; and details on shares outline how ownership is distributed. Each component is vital for establishing the corporation’s identity and operational framework.
• How do articles of incorporation differ from bylaws in terms of their function and significance within a corporation?
  • Articles of incorporation serve as the formal declaration that establishes a corporation as a legal entity, while bylaws function as internal guidelines for managing that entity. The articles are filed with state authorities and are part of public record, defining basic structural elements such as name and purpose. In contrast, bylaws detail operational procedures like meeting protocols and voting rights. Both documents are essential but serve distinct purposes within corporate governance.
• Evaluate the implications of failing to file articles of incorporation when starting a business and how this affects liability and legal status.
  • Failing to file articles of incorporation means that a business does not achieve corporate status, leaving owners personally liable for debts and legal obligations incurred by the business. Without this legal recognition, they cannot benefit from limited liability protection typically afforded to corporations, which separates personal assets from business liabilities. This situation could result in significant financial risk for owners if legal issues arise or if debts remain unpaid, potentially jeopardizing their personal finances.

Related terms

Bylaws: Bylaws are internal rules established by a corporation that govern its management and operation, detailing how meetings are conducted, voting procedures, and the rights of shareholders.

Corporate Charter: A corporate charter is a broader term that refers to the legal document establishing a corporation, which typically includes the articles of incorporation.

Registered Agent: A registered agent is a designated individual or entity authorized to receive legal documents and official correspondence on behalf of the corporation.