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Benefits Of A Certificate of Incorporation

JamesRhodes | Dec 7, 2009 |

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A legal document relating to the forming of a company or corporation is called a certificate of incorporation. It is a license to from a corporation. This is issued by each states government. In the United States, it is used as an alternative description of a company's articles of incorporation. The certificate of incorporation or articles of incorporation from a most important part of the documents of a corporation.

The Articles of Incorporation are sometimes also called the Corporate Charter. This simply means a document that states the purpose for the starting and creation of the said corporation. It states the type of corporation being established and the industry it will function in. This provides a basis for identifying the laws and regulations that the corporation will be held to during operation.

These also go into detail about whether or not the corporation will be allowed to issue stocks. It also gives information about the basic rights and privileges to extend to investors and to the members of the board of directors.

Articles of Incorporation must be included in overall corporate charters in the United States. It must be submitted for consideration for incorporation. This can be amended over time once it is accepted. This happens because corporations change focus, grow or decide to issue stocks or securities. Some states in the United States also require that they be amended when the number or identity of persons on a Board of Directors changes.

Articles of Incorporation are filed with a states regulatory agency. In the United Kingdom, the equivalent of these is called Articles of Association. No matter what this document is called they all provide the same information. This includes things like the corporations name, which has to be different from any other corporation in the area. Included as part of the name certain words must be used, they include "limited"," incorporated", or "corporation".

The certificate of incorporation must also include the names of the people starting or organizing the corporation (usually the Board of Directors). Information on whether or not it is a stock corporation. If it is a permanent corporation or a limited one that will only be around for a specific period of time. The purpose of the corporation must also be listed in most cases and whether it is for profit or a non-profit. If it will offer stock shares or not and if so how many shares the corporation is allowed to issue. It must also state the amount of money in stock that may be issued. The documentation must also show the location of the "registered office". This is usually the mailing address or location to which legal papers can be served if necessary.

In some cases, states allow a corporation to be formed by one person or in the case of non-profit corporations it may required more people to start.

Be aware that articles of incorporation vary from one corporation to another. The generally do not go into a lot of detail about day-to-day operations though. This is included in the corporations By-Laws.