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Articles of Incorporation

Articles of IncorporationIf you decide to register a corporation in the United States or Canada, you need to file a set of documents to the corresponding authority. Articles of incorporation belong to those documents. Actually, it is a single document that includes several provisions (articles) with important information about the future corporation.

What Are the Articles of Incorporation?

It is a document necessary for a business entity to be legally recognized as a corporation. There are separate documents for other types of companies, such as limited liability or association. The document contains the basic information that is required to form a corporation as well as its governance corporate statutes. In the US, companies submit articles of incorporation with the Office of the Secretary of State in the state where the business is going to incorporate.

Each state has different forms and requirements. Nevada or Delaware, for example, offer more favorable terms than other states do, such as tax advantages and non-residence in the state, thus attracting about 50% of public corporations. For example, Amazon is registered in Delaware.

In general, the document includes these articles:

  1. Corporation name.

  2. Period of duration - perpetual or with an expiration date.

  3. Name and contact information of the registered agent and office. A registered agent is a business or individual that will receive the service of process when a corporation participates in a legal action such as a lawsuit or summons.

  4. Type of corporate structure: non-profit, profit, professional, non-stock, etc.

  5. Names and contact details of the board of directors members.

  6. Number and type of authorized shares.

  7. Purpose of the corporation.

  8. Name, signature, and address of each incorporator.

Article provisions vary between states, and the document may include additional articles depending on the company. For example, Oklahoma requires the email address of the primary contact for the registered business whereas Kansas requires the tax closing month.

Each state has mandatory articles and other optional ones that the company can decide whether to include.

The document of Microsoft Corporation, which is registered in Washington, contains the following extra articles:

  • Election of directors - statement whether the shareholders have the right to cumulate votes in the election of directors.

  • Special shareholder meetings - individuals or groups (such as the board of directors) who have the right to call special meetings of the shareholders.

  • Limitation of director liability - cases when a director of the Corporation is personally liable to the Corporation or its shareholders for monetary damages for conduct as a director.

  • Mergers, share exchanges, and other transactions - individuals or groups that must approve mergers, share exchanges, and other transactions.

  • Corporation's acquisition of its own shares - cases when the Corporation may acquire its own shares.

Many states require filing fees for companies that are incorporated in the state, regardless of whether the company operates there or not. A company that incorporates in one state and physically located in another state must register in the other state as well, which may result in double payment. The size of the fees also depends on the state and can greatly vary.

For example, Washington charges a fee of $180, Texas - $300, South Carolina - $135, Pennsylvania - $125, New York - $125, Louisiana - $75, Kansas - $90, Florida - $35, Arkansas - $50, Massachusetts - $520. In Oklahoma, the fee depends on the total authorized capital (TAC) and is one-tenth of one percent or $1.00 per $1,000. At the same time, the minimum fee for Oklahoma is $50, even if the TAC is less than $50,000.

Summing Up

Articles of incorporation are provisions of a document that is filed to the US or Canadian authorities when a business entity is registering as a corporation. In general, the document contains the following articles: company name, duration, registered agent and office, corporate structure, capital shares, purpose, the board of directors details, as well as the names, signatures, and addresses of the incorporators. The required articles vary from state to state. There are also optional articles that a company can include if it wishes. The filing fees are also different in various states, from $35 in Florida to $520 in Massachusetts.